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How much does equity release cost?

In the same way there are costs when you take out a regular mortgage, there are associated costs with equity release. If you’re looking at your options, you’ll need to know the cost of equity release before you proceed.

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.

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'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 
All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £599 is only payable on completion. So, you can find out if it's 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 from as low as 4.23% fixed for life with us. Most Key Equity Release customers have received a fixed annual interest rate of 3.77% or lower. The overall cost for comparison is 3.96% APR.*

*Lowest available rate correct as of 22 June 2022. All other stated rates correct as of 9 June 2022. 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
  • All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £599 is only payable on completion
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. 
Page last updated: Thursday 23 June 2022