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.
Lifetime Mortgage Charges: What You Really Pay and How to Avoid Hidden Costs
When you take out a lifetime mortgage, a type of equity release product that lets homeowners aged 55+ borrow against their home’s value without making monthly repayments. Also known as home equity release, it’s designed for retirees who want cash without moving—but the lifetime mortgage charges can quietly shrink your estate over time. Unlike a regular mortgage, you don’t pay monthly. Instead, interest rolls up, often at compound rates, and the full amount—plus years of accumulated interest—is repaid when you die or move into long-term care. That means your home’s value could be halved by the time the loan is settled.
These loans don’t come with one single fee. There’s the interest rate, the cost of borrowing, typically fixed or capped, but often higher than standard mortgages, plus arrangement fees, legal costs, valuation charges, and sometimes early repayment penalties. Some providers even add monthly service fees. If you’re not careful, you could end up paying back more than double what you borrowed. And if you later need care or want to move, you might find the terms don’t allow flexibility—locking you in with rising debt.
Many people don’t realize how equity release, the broader category that includes lifetime mortgages and home reversion plans, affects state benefits. Taking out cash can reduce or cancel eligibility for means-tested support like Pension Credit or Council Tax Reduction. It also cuts into what you leave behind. If you have children or dependents, they might inherit little—or nothing—after the lender takes their cut. That’s why comparing providers isn’t just about the lowest rate; it’s about understanding how each charge structure impacts your long-term security.
Some lenders offer no-negative-equity guarantees, meaning you’ll never owe more than your home’s value. But that doesn’t stop the debt from growing. And if your home’s value drops, you’re still on the hook for the full loan plus interest. The key is knowing exactly what you’re signing up for—not just the monthly payout, but the total cost over 10, 15, or 20 years. Look at the total amount repayable, not just the monthly figure. Ask for a projected balance in 10 years. And never sign without independent financial advice.
What you’ll find below are real breakdowns of how these charges stack up, stories from people who regretted their decisions, and clear comparisons of the top providers in the UK. You’ll see exactly how much you can borrow, what fees are non-negotiable, and which products actually protect your family’s future—not just your cash flow today. This isn’t theory. These are the numbers that matter when your home is on the line.
