Cost Of Equity Release 2026
This guide breaks down the main potential costs involved in equity release, helping you compare options and make an informed choice. Whether you're considering a lifetime mortgage or home reversion plan, we'll explain what you can expect to pay.
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Equity release can be a valuable financial tool for homeowners over 55, but understanding the associated costs is essential before making a decision. From setup fees to interest rates and legal charges, the total cost of equity release can vary significantly depending on the provider and product.
How much equity release costs will depend on which type of plan you choose:
- Lifetime mortgage - The cost of an equity release lifetime mortgage will include the lender's initial set-up and arrangement fees, fees for financial and legal advice and having your home valued. You will also need to allow for the cost of compound interest being added to the outstanding loan amount.
- Home reversion plan - The cost of releasing equity with a home reversion plan will include fees for professional help and advice, an arrangement fee, the cost of having your home valued and your legal fees. There is no interest to pay as you have sold all or part of your home, rather than taking out a loan.
In this guide, we explain the costs involved in arranging both types of equity release.
How much does equity release cost?
Equity release typically costs between 5% and 7% in annual compound interest which will mount up over time, plus setup fees such as valuation fees (£200–£500), legal fees (£500–£1,000), and advice fees (£0–£2,000).
How much does a lifetime mortgage cost?
In summary, the costs involved in releasing equity through a lifetime mortgage are:
1. The cost of independent financial advice – payable when your equity release plan is set up
2. The cost for arranging a lifetime mortgage - payable upfront or added to the loan
3. The cost of having your home valued – payable upfront if charged
4. The cost for independent legal advice – payable upfront
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 £3,500, made up of the following fees and charges:
1. The cost of independent financial advice
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've chosen to partner with them.
Age Partnership has also negotiated preferential rates with many lenders, some of which are exclusive to them and 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 charges 1.95% of the cash sum you release or a minimum fee of £1,995, which is payable once your equity release mortgage has been set up.
Proceed with caution if you’re asked to pay for advice upfront.
How much cash could you release?
2. The cost of arranging a lifetime mortgage
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
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. Zoopla and Right Move can provide an idea of how much your house may be worth.
4. The cost of independent legal advice
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're making your decision for the right reasons without any undue influence from your adviser.
With any plan offered by Equity Release Council member, you're required to meet with an independent solicitor to ensure you understand the risks involved and the commitment you are making. It's mandatory for all plans to have at least one face-to-face meeting in person with a solicitor.
Equity release solicitor's fees
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.
All new equity release customers are required to have at least one face-to-face meeting with an Equity Release Council-compliant solicitor.
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What is the interest rate on equity release?
Equity release interest rates can be fixed or variable with a cap. You only pay interest on the equity you've released, not the 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've drawn.
An equity release lifetime mortgage 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.
Get the latest equity release interest rates available now.
What is compound interest on equity release?
Compound interest on equity release is interest paid on top of the interest already accrued on the loan amount. Also known as rolled-up interest, compound interest is charged on either a monthly or annual basis, depending on the lifetime mortgage you choose.
For example, if interest is added annually, the interest accrued at the end of the first year is added to the loan. The following year, you will pay interest on the loan amount plus the interest already added. This ultimately means that at the end of each year, the size of the loan will have increased.
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 | £3,371 | £59,551 |
| 4 | £59,551 | £3,573 | £63,124 |
| 5 | £63,124 | £3,787 | £66,911 |
| 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. | |||
You can use our equity release compound interest calculator for more accurate costs.
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 an equity release provider for significantly less than the current value of your property. As a result, the cost of a home reversion plan includes this loss in property value as well as the set up fee. You will also no longer benefit from any house price rises in the future on the percentage of your property that you've sold.
Fees for arranging a home reversion plan will consist of the following:
- Fees for professional help and advice when setting up your plan.
- An arrangement fee to the equity release provider.
- A valuation charge: the agreed value of your home will depend on the official valuation, so make sure you arrange an independent service and don't accept the first price suggested by the equity release company.
- Legal fees: get independent advice and have the terms of the agreement thoroughly checked by your own solicitor – not one proposed by the equity release provider. Your solicitor will help you understand all the details of your plan and ensure you are happy with the arrangements.
Once you've set up your home reversion plan, you'll be responsible for keeping your house in a reasonable condition. However, as you no longer own your home outright, you can't make any major home improvements.
There's no interest to pay on a home reversion plan. You can continue to live in your home rent-free for life or until you move into long-term care.
What Other Costs Should You Consider?
The interest charged on a lifetime mortgage is usually the largest long-term cost of equity release, but it's important to understand the other fees that may apply before you proceed.
Many providers offer products with no arrangement fee, while others may charge a product fee depending on the lender and plan you choose. Your adviser will explain any fees before you apply and whether they can be added to the loan.
You'll also need to appoint a solicitor to complete the legal work. This includes checking the mortgage offer, explaining the terms of the agreement and completing the transaction. Some lenders contribute towards legal costs, while others require you to pay these separately.
Your property will usually need to be valued before the lender issues a formal offer. In many cases this valuation is free, although some products or circumstances may involve a valuation fee.
If you decide to repay your lifetime mortgage early, an early repayment charge (ERC) may apply depending on your product and when you repay it. However, many modern lifetime mortgages include features such as downsizing protection or penalty-free voluntary repayments, helping to reduce potential future costs.
Before taking out equity release, your adviser will provide a personalised illustration showing all applicable fees and explaining how interest could build up over time if no repayments are made.
Typical Costs Associated with Equity Release
Cost | What to Expect |
Advice fee | May apply depending on your adviser |
Arrangement fee | Varies by lender and product |
Solicitor's fees | Legal advice and completion costs |
Property valuation | Often included by the lender, but not always |
Interest | Charged for the lifetime of the loan unless repayments are made |
Early repayment charges | May apply if you repay the loan early |
The costs you pay will depend on the lender you choose and the features included with your lifetime mortgage.
No. Some lenders offer products without arrangement fees, while others include a product fee. Your adviser can compare the overall cost of different plans rather than focusing on a single fee.
Next steps
Take a look around to find useful information on everything from the costs involved, how much you can get , frequently asked questions and lots more helpful information.
Or use our equity release calculator to get an idea of how much money you could unlock from your home.
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