How much does equity release cost?

Try our equity release calculator
how much does equity release cost

How much does it cost to release equity?

The cost to release equity from your home will depend on the equity release product you choose, a lifetime mortgage or a home reversion plan.

  • The costs for a lifetime mortgage include initial set up fees plus interest accrused
  • The cost of releasing equity with a home reversion plan includes arrangement fees for selling a percentage of your property but no interest.

The following guide explains the costs involved in arranging both types of equity release. If you need further information about the costs associated with equity release, please do get in touch.

How much does equity release cost with a lifetime mortgage?

Using a lifetime mortgage to release equity from your home involves paying for several professional services, so it's important to budget for these. According to the Equity Release Council, the average cost of arranging a lifetime mortgage is between £2,000 and £3,000, made up of the following fees and charges:

1. The cost of independent financial advice – payable when your equity release plan is set up

It’s important to get independent financial advice from a professional, reputable equity release specialist. Your adviser will help you decide if equity release is the right path for you and ideally research the whole market to find you the best deal from the most suitable lender .

Age Partnership is a market-leading equity release specialist able to compare leading UK equity release providers on your behalf, which is one of the reasons why we have chosen to partner with them

They have negotiated preferential rates with many lenders, some of which are exclusive to them. They also do all they can to negotiate reduced set-up costs and sometimes even cash back on completion.

Most equity release advisers offer the initial consultation free of charge. If you go on to apply based on their advice, you pay a fee at that point. Age Partnership typically charge 1.95% of the cash sum you release or a minimum fee of £1,395, payable once your equity release mortgage has been set up.

Proceed with caution if you’re asked to pay for advice upfront.

2. The cost for arranging a lifetime mortgage - payable upfront or added to the loan

Arrangement fees cover the set-up of your mortgage and will vary depending on your lender. It could be a set amount of between £500 and £1,000, or a percentage of the loan value. These fees are payable once your lifetime mortgage is in place either as a one-off payment or by adding it to the sum you're borrowing – if you choose the latter you'll pay interest on it.

3. The cost of having your home valued – payable upfront if charged

If you took out a mortgage when you originally bought your home, you would have had a survey conducted to satisfy your lender of the property’s market value; the same applies to an equity release mortgage.

Your lender will usually arrange the valuation for you, often free of charge. Some lenders do charge but might also offer extra benefits, that balance out this cost.

4. The cost for independent legal advice – payable upfront

Releasing equity from your home using a lifetime mortgage is a big decision, and it's important to get the right advice at key points along the way.

If you decide to apply for equity release, the Equity Release Council’s rules require you to consult with an independent solicitor with no connection to your mortgage lender. You must also have at least one meeting with this solicitor before you proceed.

This is a valuable step in the process; designed to ensure you understand exactly what you are committing to, and that you are making your decision for the right reasons without any undue influence from your adviser.

With any plan offered by Equity Release Council member you are required to meet with an independent solicitor to ensure you understand the risks involved and the commitment you are making. It is mandatory for all plans to have at least one face to face meeting in person with a solicitor.

The cost of a solicitor for arranging equity release

Solicitor’s fees for equity release vary depending on the firm and what services are included. As a rule of thumb, allow between £750 and £1000 including VAT for legal advice, money laundering checks, obtaining copies of land registry paperwork and bank transfer charges.

If any additional legal services are required, these will be an additional cost. For example, issues with the freehold or changes to title deeds such as a CCJ (County Court Judgement) or a name change.

Try our equity release calculator

What is compound interest?

Compound interest is when you pay interest on top of the interest already accrued, in addition to the loan. Also known as rolled up interest, the interest is charged on either a monthly or annual basis, depending on the lifetime mortgage you choose.

For example, if interest is added monthly, the interest accrued at the end of the first month is added to the loan. You then pay interest on the loan plus the interest already added. This ultimately means that at the end of each month, the size of the loan grows.

Here is a simple example of how compound interest works:

Year Loan 6% Interest Rate Total owed
1 £50,000 £3,000 £53,000
2 £53,000 £3,180 £56,180
3 £56,180 £3,370 £59,550
4 £59,550 £3,573 £63,123
5 £63,123 £3,787 £66,910
This is the Equity Release Council’s example of how the annual payments on a £50,000 loan with an interest rate of 6% could work

How much does equity release cost with a home reversion plan?

A home reversion plan works by selling some or all of your home to a provider. The cost of a home reversion plan consists of set-up fees and the loss in property value, as you will a) receive significantly less than current property prices for the sale of your home, and b) no longer benefit from house price rises on the percentage of your property that you've sold.

The initial cost of arranging a home reversion plan will consist of the following:

  1. Fees for professional help and advice when setting up your plan.
  2. An arrangement fee to the equity release provider.
  3. A valuation charge: the agreed value of your home will depend on the official valuation, so make sure you arrange an independent service; never accept a price suggested by the equity release company.
  4. Legal fees: again, make sure you get independent advice and have the terms of the agreement thoroughly checked by your own solicitor – not someone proposed by the equity release provider. Your solicitor will help to ensure you understand all the details of your plan and are happy with the arrangements.

Once you've set up your home reversion plan, you may have to pay maintenance costs for keeping your house in a reasonable condition. With a reversion plan, you’re technically renting your home and are no longer the owner. This also means you can't make any major home improvements.

There is no interest to pay on this kind of equity release plan. You can continue to live in your home rent free for life or until you move into permanent care.

Next steps

To see how much equity you could release from your home, use our free and easy to use calculator.

Or for free advice from an equity release specialist Age Partnership, call 0800 368 8466.

Try our equity release calculator

What is the interest rate on equity release?


In 2022, equity release interest rates are typically between 3% and 5%, although some companies are offering lower rates than this, including our preferred independent equity release specialist Age Partnership.

Equity release interest rates can be fixed or variable with a cap. You only pay interest on the equity you have released, not he money held in reserve. So, if you don’t need the cash in one go, a drawdown mortgage could ;save you money as you only pay interest on the funds you have drawn.

As interest rates have fallen over recent years, releasing equity has become cheaper than ever before, although it is still more expensive than a standard mortgage. However, it’s worth keeping in mind that while the cost of your equity release loan increases, the value of your home will hopefully increase too;

If you found this post about the cost of equity release useful, you may want to read some further features about equity release:

Don't miss out...

Sign up to our monthly newsletter for the latest updates

Our trusted partner

Age Partnership

We are members of

Equity Release Council

Part of the Over50choices group

Over 50 Choices

We are authorised & regulated by the Financial Conduct Authority

Try the Calculator