How much does Equity Release Cost?
Let us be quite frank right from the start, Equity Release is not a cheap way of raising finance. Unfortunately, if your income is very tight it may be the only way to raise capital without having to pay anything back while you’re alive (or have no need for your home).
You will need advice when taking out an equity release product. The cost of advice can vary significantly, expect to pay about 1% of the amount you borrow. Don’t be tempted to skip advice as there are a lot of things that can go wrong.
There is a requirement for you to discuss the matter of equity release with a solicitor. In the same way that you have conveyancing fees when an ordinary mortgage is arranged, you will also have to employ a solicitor to carry out the conveyancing on an equity release mortgage. The cost may be a little higher than normal since the solicitor has to explain the pros and cons of entering into equity release.
The lender may charge an arrangement fee. Expect something in the region of £500-£750
Now for the big one: Interest will be charge on the amount outstanding. If you are not making any payments to the lender then the interest is added to the mortgage and you will pay interest on interest; the debt will grow. We have devised a calculator to help you determine how the correlation between debt and equity may develop over time.