You are using an outdated browser. Please upgrade your browser to improve your experience.

How much does equity release cost?

If you’re thinking about unlocking money from your home, you’re probably wondering about the cost of equity release. We’re here to help with our quick and easy guide.

four pairs of hands and a small house on artificial grass

Equity release is a popular way to unlock tax-free cash from the value of your home. And for many, the fact that money doesn’t have to be repaid during your lifetime is part of the appeal.

Nonetheless, there are still costs attached to equity release plans – including initial charges and interest rates – so it’s well worth being in the know about what to expect.

Before we explore the cost of equity release, here’s a quick reminder…

How does equity release work?

Equity release is available to homeowners aged 55 and over. It enables you to access cash tied up in your home – so you can boost your income in later life without having to downsize. The money you release is yours to spend as you wish.

A lifetime mortgage is the most popular type of equity release plan. Typically, this enables you to way to borrow money against your property, while maintaining 100% ownership. You won’t have to worry about making monthly repayments either. Instead, your loan plus the interest accrued over the years is repaid when your home is sold when you pass away or move into permanent care.

Thanks to the no-negative equity guarantee, the amount you owe can never exceed the value of your home – so you know you won’t leave your family with debt to pay.

Read more about how equity release works

a mature couple looking at floor plans and calculating costs

What are the initial charges?

This depends on which provider you go with. Before you decide to take out an equity release plan, make sure you seek advice from an independent equity release adviser – and they can talk you through your options.

Usually, you can expect to pay for advice from a financial adviser (if you end up taking out an equity release plan), plus the provider’s administration or application fees. There may also be solicitors’ fees (for conveyacing, for example) and a charge for a surveyor to value your property.

Overall, these intial charges can amount to between £2,000 and £3,000*. But with the SunLife Equity Release Service, you can access initial advice free of charge from our partner, Age Partnership – and there’s no obligation to continue if you don’t wish to. That’s one way to help keep some of the costs down.

* According to the Equity Release Council

red cubes with percentage signs on

What about equity release interest rates?

On top of the set-up charges, you also need to consider interest rates.

Today, interest rates on lifetime mortgages products are usually between 5% and 6% – and this can be fixed for the life of your loan.

How much your interest amounts to at the end of your lifetime mortgages will depend on how long it runs for (remember, it’ll come to an end when you sell your home, when you pass away or move into permanent care) and which type of plan you choose.

For example, with a roll-up lifetime mortgage (which gives you your tax-free cash in one lump sum), the interest on your loan is ‘rolled up’ and it ‘compounds’ each month or every year depending on the plan you choose. This means that the amount you owe to your lifetime mortgage provider grows every year.

Read more about the different types of lifetime mortgages

‘Rolled-up/compound interest’ explained

It sounds complicated, but it’s pretty straightforward really. Here’s a simple explanation of how rolled-up/compound interest works with a roll-up lifetime mortgage:

  • At the end of the first month or first year (depending on your plan), the amount of interest charged is simply added to the original loan
  • The following month or year, the interest will be ‘compounded’ – meaning it’s calculated based on the sum of the original loan, plus the interest charged during the first month or year
  • This process continues in the same way for every month or year that follows
  • So, even though the interest rate can stay the same, the amount you owe to your provider will be calculated every month or every year based on the larger amount

The table below shows a clear example – based on an annually rolled-up lifetime mortgage loan of £50,000 with an interest rate of 6%^.

YearLoanInterest at 6%Total owed
1 £50,000 £3,000 £53,000
2 £53,000 £3,180 £56,180
3 £56,180 £3,370 £59,550
4 £59,550 £3,573 £63,123
5 £63,123 £3,787 £66,910

Source: Equity Release Council

^ The actual rate available will depend upon your circumstances. The plans above are just some of the lifetime mortgages that are available, but there are many other plans available and these terms and rates can change at any time.

FREE SunLife Equity Release Calculator – see how much cash you could unlock.

a family jointly holding a small wooden house

You can still leave an inheritance

Because your equity release plan will be paid off through the sale of your home, it’s true that you won’t be able to leave your property or the full value of your property to your children. But any money left over after the loan and interest has been paid will go to your estate. So it’s still possible to leave an inheritance.

If leaving an inheritance for your loved ones is really important to you, you can choose a plan with inheritance protection. This is a way to ringfence a portion of your home’s value as a legacy. Be sure to tell your independent equity release advisor about your preferences when you meet them – that way, they’ll be able to find an equity release plan that works for you.

a happy couple talking things over with an equity release adviser

It’s time to seek advice

If you’re considering equity release, then it’s important to get independent advice before making any final decisions. A financial adviser can talk you through the details – including the cost of equity release – so you can decide whether it’s the right option for you.

Article correct as at 28/04/2018

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, equity release, pet insurance, home insurance, car insurance, ISAs and Will writing services

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

The funeral services are arranged and provided by Dignity Funerals Ltd which is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.