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The True Cost of Equity Release

Equity release is a range of products that lets you tap into the equity from your home once you reach the age of 55. Your age, the value of your home, and whether or not you already have ongoing mortgage payments will all be factored into determining whether or not you qualify and how much you’ll be able to borrow if you do.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.


Learn More about Equity Release

It seems that equity release has been experiencing a renaissance. We’ve covered the topic frequently –

Equity release is great because it provides a number of options for you to choose from, both for borrowing and spending. The two products you can select from are lifetime mortgages and home reversions. And you can receive your money as a lump sum, in multiple payments, or a combination of the two.


You can do whatever you want with the money from equity release – holidays, renovations, or even for just some extra spending money.


How Much Can I Borrow?

Of course, the exact figure of how much you can borrow is dependent on an individual’s unique situation. Most providers have what they call a “no negative equity” guarantee; this means that lenders will not allow a borrower’s debt to be greater than the value of their house, and you’ll only be able to borrow a portion of what your home is worth.


Generally, if you’re in your mid to late 60s when searching for an equity release product, you can expect to be able to borrow about 35% of your property’s value.


Among the standard criteria – age, home value, and current mortgage payments – some providers will take into account your home’s location. The deal you get may be influenced by whether or not your area is deemed higher risk, so be sure to keep this in mind when searching for a product that’s right for you.


How Much Will it Cost?

It might not seem like it, but how much you’ll be able to borrow through equity release is a much more straightforward question than how much it will cost.

Firstly, you’ll need to consider the interest rate of the loan, which are higher than traditional loans, plus the possibility of application or administration fees, solicitor fees, and surveyor fees. Not every provider will charge these costs, and of course for those that do, these costs will vary from lender to lender – some may even offer cash back incentives to sweeten the deal.

You’ll also need to remember that the housing market is constantly in flux – house prices will rise and fall throughout the years so you’ll never be able to ascertain exactly how much equity you can count on and there’s always the chance that the equity you thought you had falls during the life of the loan. It’s important to do your research before settling on a provider and ensure you’re cashing out at the right time.


Work With a Trusted Advisor

Equity release products are often complicated and difficult to understand, and will more than likely require professional help if pursued. Although gaining popularity, the market is still quite niche and will require a specialist’s knowledge to ensure you get the most from your equity release product.

You should seek out someone who has special qualifications for advice on equity release.

Our very own Darren Scott-Guinness has the all the qualifications to advise on equity release and he’s happy to help you build equity release into your overall financial plan, so get in touch today.


Should equity release be part of your financial plans?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

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