Is There a Charge for Equity Release? Here’s What It Really Costs
Equity release isn't free - it comes with fees, interest, and long-term costs. Learn what you really pay when unlocking cash from your home, and how to avoid costly mistakes.
Equity Release Fees: What They Are and How to Avoid Hidden Costs
When you take out an equity release, a financial product that lets homeowners aged 55+ unlock cash from their property without selling it. Also known as home equity release, it’s often used to cover retirement costs, home repairs, or help family—but it’s not free money. Every pound you get comes with costs, and many people don’t realize how much until it’s too late.
The biggest fee you’ll face is the lifetime mortgage, a type of equity release loan that rolls interest into the balance over time. This means your debt grows, sometimes doubling or tripling, because interest compounds. On top of that, there are arrangement fees, valuation fees, legal fees, and sometimes early repayment charges. These aren’t hidden—they’re buried in paperwork most people never read. If you’re considering this route, you need to know exactly what you’re paying for.
Some providers claim their fees are "no upfront cost," but that’s just a trick. The fees get added to your loan balance, so you’re still paying them—plus interest on top. Independent financial advice isn’t optional here. In the UK, you’re legally required to get it, and for good reason: a bad deal can slash your inheritance, affect your benefits, and lock you into terms you can’t escape. Compare providers like Aviva, Legal & General, and More2Life—not just on interest rates, but on their fee structures too.
Not all equity release plans are the same. Some let you make voluntary payments to slow down interest growth. Others let you set aside a portion of your home’s value to leave to your family. These features matter—and they cost extra. The right plan for you depends on your age, property value, health, and long-term goals. Don’t just pick the one with the biggest upfront payout. Look at the total cost over time.
There’s also the risk of losing means-tested benefits. If you take a lump sum and keep it in savings, you might lose eligibility for Pension Credit or Council Tax Reduction. That’s why some people choose drawdown plans—taking money in smaller amounts as needed. It’s not glamorous, but it keeps your finances cleaner and your benefits intact.
What you’ll find in the posts below are real breakdowns of what equity release actually costs, who gets hit hardest by fees, and how people have avoided costly mistakes. You’ll see how much equity you can realistically release, what the hidden traps are, and why the "easy cash" myth doesn’t hold up under scrutiny. No fluff. No sales pitches. Just what you need to know before you sign anything.
