How Much Does Equity Release Cost?

What is equity release?

Equity release gives homeowners aged 55 and over the opportunity to enhance their finances by releasing some of the tax-free funds from their homes.

If you’re considering equity release, there are certain criteria that you must meet in order to qualify. It’s worth speaking to our team as our expert equity release advisers can provide advice and help find the product that’s right for you.

In addition to getting expert equity release advice from us, you’ll need to know the average fees for equity release. By finding out what the initial charges are, you’re in a good position to take your application forward.

Key Equity Release offer lifetime mortgages only. A lifetime mortgage is a loan secured against your home and may affect your entitlement to means tested benefits.

What are the equity release set-up costs?

You may be wondering how much equity release costs. Like when you first took out your mortgage, there are services and processes that you’ll need to pay for, and these are an additional expense that you need to be aware of.

These services include advice and application fees. All of our equity release advice relates to our range of Key branded products and is completely free of charge. So, to give you added peace of mind, the expert support you receive from our team doesn’t factor into the costs you’ll need to account for.

Ultimately, the initial costs you pay in order to access your equity release will depend on the provider that is recommended to you and the product that you select.

What fees will you pay?

When you’re working out the cost of equity release, there are three services that you’ll need to budget for:

Surveyor's valuation
Solicitors' fees
Lender's application

Here, we guide you through what these different services involve. You will be familiar with these as they all form part of the process you'll have followed when taking out your mortgage.

Surveyor's valuation

You'll need to cover the cost of a survey (subject to plan criteria). This is a requirement before you take out equity release, and it’s one of the key costs of equity release that you’ll need to pay for.

The surveyor will value your property and send their report to the lender. If you choose to go ahead with Key Equity Release, you can be confident of securing a market valuation as your property will be valued by an independent RICS-registered surveyor.

Following a satisfactory valuation, and considering other factors, such as your age, health and lifestyle, you’ll be issued with an offer. It's then up to you to decide whether you're happy to go ahead.

Solicitors' fees

If you're happy with the offer and want to go ahead, you'll need to instruct a solicitor. We can suggest a panel of expert independent equity release solicitors. They'll take care of all the legal work on your behalf and make sure everything is in order up until your money is released.

You are, of course, free to choose your own solicitor if you wish, but we always suggest that your case is handled by a solicitor who has experience in equity release transactions. For their service, you'll typically pay around £1,250, although that's subject to their criteria. Whatever the final amount, you’ll need to include this as part of the equity release set-up costs.

Lender's application

Again, like when taking out a regular mortgage, you may also be charged an "application" or "administration" fee by the lender.

These typically cover set up and legal costs. The lender decides how much they charge, but the cost usually ranges between free of charge to £695, depending on the plan that’s recommended to you.

What's the total cost?

The average fees for taking out equity release are estimated to be in the region of £1,850. But it's also worth noting that not every application will incur the same charges. For example, with some plans, you won’t pay a lender’s application or survey fee. It's important you speak to an expert equity release adviser to find out what you'll pay before you agree to release equity.

When do you pay your equity release fees?

Even though the fees above cover the entire process, you may be expected to pay them at different times.

Surveyor's valuation

If applicable, this is usually paid with the application

Solicitor's fees

This is typically paid when you receive your tax-free funds on completion.

Lender's application fee

If applicable, this is usually paid when your plan begins, and you receive your tax-free funds.

Our advice

We won’t charge you for our expert equity release advice or support. Read on to find out more about the advice we offer.

Our advice

Before you take out equity release, it's crucial you seek expert equity release advice. It's a regulatory requirement. Your application won’t be accepted without it – and that's where we come in.

Our equity release advice is unique to you and your needs, delivered by qualified experts. We take the time to understand you, ensuring we find and recommend the right solution for you.

If equity release isn’t right for you, we’ll tell you. If it is, and you want to find out more, we’ll search the entire product range we have created to make sure we find the plan that suits your needs. Our expertise is guided by 20 years’ experience in the industry and unique insight from helping over one million people decide if equity release is right for them.

We're with you every step of the way on your equity release journey. You’ll have a dedicated case handler to support you throughout, answering any questions you have and overseeing your application right through to completion.

Whether you want to ask us how much equity release costs or you need to get an update on your application for equity release, we’re here to help.

And remember, all of our expert equity release advice is completely free of charge.

All of our equity release advice relates to our range of Key branded products and is completely free of charge. So you can find out if its right for you without it costing you a penny.

What interest rate do you pay on equity release?

As well as the typical fees that you’ll need to cover, it’s important that you’re aware of how much interest you pay with a lifetime mortgage, the most popular form of equity release. Annual interest rates can be available from as low as 2.37% fixed for life with us. Most Key Equity Release customers have received a fixed annual interest rate of 3.79% or lower. The overall cost for comparison is 3.97% APR*.

*Lowest available rate correct as of 5 January 2021. All other stated rates correct as of 5 January 2021. Interest rate received and plan features are subject to eligibility. Ask for a personal illustration.

Do I need to pay tax on equity release?

Equity release is when you release some of the tax-free cash from your home. This is because it’s classed as a loan, rather than a type of income. So, no matter which product you choose, you don’t have to pay tax on the amount you released and this is not a cost of equity release that you’ll need to factor in.

However, depending on how you invest the released equity, there may be tax implications. For instance, if you gift the equity release to family, Inheritance Tax might be applicable. Therefore, the potential for taxing the equity in the future should be a consideration before you do anything with it.

Things to consider

Your specialist equity release adviser will explain:

You have to get advice before releasing tax-free cash from your home - please read all our information and make sure it’s right for you
Key Equity Release offer lifetime mortgages only, which is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits
All of our plans meet the Equity Release Council standards and come with several protections, including the no negative equity guarantee, which means you’ll never owe more than your home’s value

If you’d like to discuss your options further or get some help deciding whether equity release is for you, speak to one of our expert advisers. They will go through the plans available and help to find one that suits you. Call us on 0808 2529170. Lines are open Monday to Friday, 9am - 5.30pm.

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Page last updated: Wednesday 06 January 2021