Equity release costs can vary based on the provider, the type of plan, and the value of your property.

In 2025, costs typically include interest rates, setup fees, and ongoing charges.

In this article, the TimeBank team will give you an overview of these costs so you’ll be on your way to making an informed decision.

What Is Equity Release?

Equity release is a financial tool that allows homeowners over the age of 55 to access the equity tied up in their homes without needing to sell up or repay the loan in their lifetimes.

Products include lifetime mortgages and home reversion plans. 

Of course, these financial products come with their own set of costs that must be carefully considered.

How Much Does Equity Release Cost in 2025?

How much equity release costs can vary significantly based on the provider, the type of plan, and the value of your property, though you’re probably looking at between £1,500 and £3,000 in fees (not including interest payments).¹

In 2025, costs typically include setup fees, advice fees, solicitor’s fees, and interest payments (if you choose to make any).

Understanding these costs is crucial to making an informed decision about whether equity release is the right financial move for you. 

What Are the Equity Release Setup Costs/Initial Charges?

Equity release setup costs or initial charges cover the administrative and legal work required to establish the plan. 

It’s important to be aware of these costs up front to avoid any surprises. 

These initial charges ensure that the equity release process is set up correctly and legally, providing peace of mind that all aspects of the plan have been thoroughly addressed. 

Additionally, understanding these costs helps in comparing different equity release providers and their offerings.

What Fees Will You Pay?

When setting up equity release, you will encounter several fees.

Let’s look at a breakdown of the most common ones.

Surveyor’s Valuation

A professional valuation of your property is necessary to determine the amount you can release. 

The cost for a surveyor’s valuation usually ranges from £200 to £400.² Some providers might include this fee in their service. 

This valuation is a critical step as it establishes the current market value of your home, which in turn determines how much equity you can access. 

Accurate valuation ensures that you get a fair deal based on the true worth of your property.

Solicitors’ Fees

Legal work is required to set up the equity release plan, and you will be required to instruct an independent solicitor.

Solicitors typically charge about £750 for this kind of work, though fees can vary significantly.³ 

These fees cover the legal checks and preparation of contracts. 

The solicitor ensures that all legal aspects are properly managed, including the verification of your property’s title and the drafting of necessary legal documents. 

This ensures that the equity release process is legally sound and that your rights and interests are protected throughout the agreement.

Application or Administration Fees

Equity release providers often charge an application or administration fee. 

This fee varies but generally ranges from £500 to £3,000.^4,5 

These fees cover the cost of processing your application and setting up your plan. 

This includes administrative tasks such as document preparation, account setup, and coordination with other parties involved in the process. 

Understanding these fees helps you compare the total costs across different providers and select the most cost-effective option.

Advice Fee

A specialist equity release advisor can help you navigate the process. 

According to debt charity StepChange, advice fees typically range from £500 to £2,000.⁶ 

Some advisors may offer a fixed fee, while others charge a percentage of the loan amount, typically about 1,9%.⁷ 

The advisor’s role is to provide you with tailored advice based on your financial situation and objectives, ensuring you choose the most suitable equity release plan. 

Their expertise helps you understand the implications of equity release and assists in making an informed decision.

What Additional Costs Are There With Equity Release?

Beyond the initial set-up costs, there are additional expenses you need to consider.

These are:

• Interest: Equity release interest rates are usually higher than standard mortgage rates and can be either fixed or variable. It is important to remember that if you choose not to make interest payments, the interest will compound over time and significantly increase the total amount owed.
• Maintenance Costs: As a homeowner, you are responsible for maintaining your property. This includes repairs and insurance. Keeping the property in good condition is important as it affects its value and the amount of equity available. Regular maintenance ensures the property remains a valuable asset, which is beneficial if you need to release more equity in the future or when the loan is eventually repaid.
• Early Repayment Charges (ERCs): If you repay the loan early, you may face significant charges. These vary by provider. Understanding the terms related to early repayment is important if you think you might want to repay the loan early due to changes in your financial situation. Being aware of ERCs helps you plan better and avoid unexpected costs.
• Home Insurance: You will be required to maintain adequate insurance on your property.

When Do You Pay Your Equity Release Fees?

Most equity release fees are paid upfront during the setup process. 

However, some fees, such as interest, are added to the loan balance and paid when the property is sold (or during the term if you choose to make interest payments). 

Upfront fees cover initial administrative, legal, and advisory costs, ensuring that the equity release plan is properly established. 

Understanding the timing of these payments helps in budgeting and financial planning, ensuring that you are prepared for both immediate and long-term financial commitments.

Can You Pay Your Interest?

All new lifetime mortgage plans approved by the Equity Release Council allow borrowers to make voluntary interest payments up to an agreed amount annually, reducing the overall cost of the loan.⁸ 

This option can help manage the amount of debt that accumulates over time. 

By paying the interest regularly, you can prevent it from compounding, thereby reducing the total amount repayable. 

This flexibility can make equity release more manageable and cost-effective, especially if you have sufficient income or savings to cover these payments.

What Are Early Repayment Charges (ERCs) For Equity Release & Lifetime Mortgages?

ERCs are fees charged if you decide to repay your equity release loan early. 

The calculation method can vary between lenders and products, but the two most common approaches are fixed-percentage and gilt-linked.

Fixed Percentage ERC

Fixed-percentage ERCs are calculated as a fixed percentage of the amount repaid.

Example:

A lender charges 5% of the amount repaid if you repay within the first 5 years and 3% in the following 5 years.

If you repay £50,000 within 3 years, the ERC would be £2,500 (5% of £50,000).

Key Feature:

The percentage often decreases over time and may drop to 0% after a set period (e.g., 10 years).

Gilt-Linked ERC

Gilt-linked ERCs are tied to the performance of UK government bonds (gilts) at the time of repayment.

Formula:

The ERC is based on the difference between the gilt yield when you took out the loan and the yield when you repay it.

If gilt yields have fallen, the charge will be higher, as the lender is losing more on their expected return.

Example:

If the gilt yield was 3% when you took the loan and has dropped to 1% when you repay, the ERC could be significant.

Key Feature:

Gilt-linked charges can be unpredictable and depend on market conditions.

Other Factors Affecting ERCs

There may be other factors affecting ERCs.

These include:

• Time Left on the Loan: ERCs are generally higher if repayment occurs earlier in the loan term.
• Loan Agreement: Some plans include a penalty-free repayment window, such as after moving into long-term care or upon the death of one homeowner in a joint plan.
• Partial Repayments: All new equity release plans approved by the Equity Release Council allow limited penalty-free repayments (e.g., 10% of the loan amount per year).

Key Considerations

There are some key factors to consider when studying ERCs.

What to do:

• Check if the plan is approved by the Equity Release Council, as their products often have fairer ERC terms.
• Understand your lender’s specific ERC policy before signing the agreement.
• Discuss ERCs with your financial advisor, as that may help you choose a plan with manageable early repayment terms tailored to your needs.

Early repayment might be considered if your financial situation changes, such as receiving an inheritance or selling another property. 

Understanding ERCs allows you to evaluate the feasibility and cost implications of repaying the loan early, ensuring you make a financially sound decision.

Equity Release Calculator

Using an equity release calculator can help you estimate the amount you can release from your property and the associated costs. 

Many providers offer online calculators that consider your property’s value, your age, and other factors. 

These calculators provide a preliminary understanding of how much equity you can access and the potential costs involved. 

By inputting different variables, you can explore various scenarios and make a more informed decision about whether equity release is the right option for you.

Tips to Keep Costs Manageable

There are several tips available to help you keep equity release costs manageable while maximising the benefits of your plan.

These include:

• Compare Plans and Interest Rates: Compare equity release products from multiple providers to find the most competitive interest rates and terms. Opt for fixed rates if possible, as they offer predictability and protection against rising interest costs.
• Make Voluntary Repayments: All new equity release plans that conform to Equity Release Council standards allow voluntary repayments, often up to 10% of the loan amount annually, without penalties. Making repayments reduces the loan balance and the amount of interest that compounds over time.
• Use Flexibility Options: Instead of taking the full loan amount upfront, use a drawdown plan to access funds as needed. Interest is only charged on the money you withdraw, not the full amount available, meaning you’ll save on interest if you don’t take all the cash available at once.
• Choose Plans with Low or No Early Repayment Charges (ERCs): If your circumstances change, plans with reduced ERCs or penalty-free repayment options can save significant costs. Some providers waive ERCs after a set number of years or in specific situations, such as moving into long-term care.
• Plan the Loan Amount Carefully: Avoid over-borrowing by assessing your financial needs realistically. Smaller loans accrue less interest, helping to preserve your home equity.
• Monitor Plan Reviews and Market Conditions: Schedule periodic reviews with your financial advisor to ensure your plan still aligns with your goals and financial circumstances. Look out for new products or lower rates in the market that could be more cost-effective.
• Check for Additional Fees and Costs: Ensure your solicitor provides a clear and transparent breakdown of their fees, and ask if valuation and setup fees are included or if they’ll incur extra costs.
• Maximise Your Estate Planning: Consider plans that allow you to ring-fence a portion of your home’s value for inheritance. This will ensure you leave a financial legacy while still accessing equity.
• Consult a Financial Advisor: An advisor can help identify the most cost-effective plan suited to your specific financial goals. Choose advisors and lenders who are members of the Equity Release Council, as they follow strict consumer protection standards.
• Explore Alternatives: Consider other options, such as downsizing or Retirement Interest-Only Mortgages (RIOs), to see if they are more cost-efficient for your needs.

By taking these steps, you can reduce the overall costs of equity release and ensure the plan supports your long-term financial well-being.

Common Questions on the Costs Involved With Equity Release

Final Thoughts on Equity Release Costs

Understanding the costs associated with equity release is crucial to making an informed decision. 

By considering interest rates, fees, and potential additional costs, you can ensure that equity release is the right choice for your financial needs. 

Always seek professional advice and use tools like equity release calculators to help manage and minimise expenses effectively. 

Products like lifetime mortgages can provide significant financial benefits, but it’s essential to understand equity release costs and implications.