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Equity Release Solicitors Fees – How Much Will It Cost Me?

Equity Release Solicitors Fees

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

How much will you be expected to pay in equity release solicitors fees as part of the equity release process? This is one of the main questions we’ll be answering in this guide as we take a look at the use of financial advice and legal advice before applying for a lifetime mortgage. Find out how much you will be expected to pay for equity release legal advice here.

What is equity release?

Senior homeowners may struggle to access personal loans and other types of credit, but they can use the equity in their home to access a lump sum loan or drawdown loan. This is known as equity release, a method of borrowing exclusively available to senior homeowners over the age of 55 with no outstanding mortgage.

With equity release, they take out a tax-free loan up to 80% of the value of their home and do not have to make any monthly repayments. You may be asking why they don’t have to repay the loan, but in fact, they do. 

The loan is repaid when they die through their estate. Beneficiaries must sell the property within a set timeframe, often one year, and use some of the sale proceeds to pay back the lender. The only time the loan is repaid early is if:

  1. The senior homeowner moves out of the property and into long-term care
  2. The senior homeowner decides to pay off their equity release plan early, which will incur hefty early repayment charges with the bulk of lenders. 

Equity release can be achieved with one of two products, either a lifetime mortgage or a home reversion plan. Both of these work as described above but with some key differences, which we explain shortly. 

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Equity release eligibility criteria

To be eligible to take out an equity release plan with most lenders, you will need:

  1. To be at least 55 years old. This applies to the age of the youngest homeowner in joint applications. 
  2. To be releasing equity from your main residence and not a rental or holiday property.
  3. To have already paid off all or most of the property’s residential mortgage.
  4. To have no other debts attached to the home, such as a secured home improvement loan
  5. To own a property that exceeds a minimum value set by the lender, typically around £70,000-£80,000.

Why do people choose equity release?

Equity release can be an advantageous way to secure a cash lump sum in later life and be used to pay for retirement. Some of the popular reasons people decide to use equity release are to go on frequent holidays, pay for private healthcare services, complete home improvements or to gift the money to family members, as a sort of early inheritance. 

What is the catch with equity release?

It can sound too good to be true – but with equity release, you really do receive money with no monthly repayments required. The catch is that the amount you do end up paying back is usually considerably more than what you take out. With a home reversion plan or a lifetime mortgage that lasts for over 10 years, expect to repay more than double what you took out. 

This has a serious effect on the amount of inheritance you leave behind for loved ones, which often makes it an easier decision for those without children. 

The main two types of equity release explained

As stated earlier, there are two equity release products used in the UK. A lifetime mortgage is the most used equity release scheme, but another equity release option is a home reversion plan. Only consider either equity release plan from a lender that is authorised and regulated by the Financial Conduct Authority. 

  1. Lifetime mortgage

A lifetime mortgage is an equity release loan that charges the homeowner interest on the amount of equity they release. The homeowner is not required to make repayment on the loan amount or the interest, so the interest just keeps building up each month to make the total amount owed grow. Homeowners may be allowed to make voluntary interest repayments to prevent the debt from escalating. 

Once the last surviving homeowner dies or moves into care, the total debt is owed through the sale of the property. 

  1. Home reversion plan

A home reversion equity release scheme swaps a percentage of equity as a loan today for a greater percentage of the property’s sale value. For example, you may release £50,000 from a £200,000 property (25% equity) but have to repay 75% of the sale proceeds when the time comes for the debt to be repaid. This would mean repaying £150,000 if the property value remained the same. 

Do you need to receive financial advice first?

Equity release is a huge decision that can be unaffordable to get out of once you have committed. For this reason, it is imperative that you receive equity release advice before making a decision. This advice should explain the full projected costs, the effects of equity release on other things such as means-tested benefits etc., and explore alternative solutions first. 

Many lenders offer homeowners the chance to use their own financial advisers, who should operate with professionalism and not push you to choose their lender’s lifetime mortgages or other plans. Alternatively, you can use an independent equity release adviser not connected to a lender. 

Most equity release advice services charge a percentage of the loan you wish to take out as a fee upon application. This is usually between 1-4% of the loan. But there are others that charge a fixed fee of around £900, which could be financially beneficial if you’re trying to get a larger loan. 

How to choose equity release advice

Homeowners should only choose financial advisers that specialise in equity release. The adviser they use must be authorised and regulated by the Financial Conduct Authority, and preferably they should be members of the Equity Release Council. 

What is the Equity Release Council?

The Equity Release Council is a body that governs the equity release sector in the UK. It is not mandatory to become a member of the council, but doing so can help lenders, financial advisers and lawyers to be recognised as legitimate and preferred service providers. 

The council has created an extensive list of rules and guidelines that all of its members should follow stringently. These rules are there to protect homeowners and make 

Do you need a solicitor for equity release?

On top of financial advice, you also need to receive legal advice to act on your behalf throughout the process of applying for equity release. This will protect you and give you additional peace of mind. 

Do you have to have a solicitor for equity release?

The Equity Release Council makes it mandatory that homeowners must receive legal advice before pursuing an application for lifetime mortgages or other equity release plans. 

This is mandatory to carry out legal tasks during the process, but also to help prevent homeowners from falling victim to any rogue financial advisers who wrongfully promote equity release. 

You can read stories about mis-sold equity release here

Can I use any solicitor for equity release?

You may not be able to use your local or family lawyers to help with the equity release process. The Equity Release Council states that only law firms with at least four practising lawyers can provide equity release legal advice. If your local law firm has less than four lawyers, you’ll need to look elsewhere. 

You should also prioritise lawyers who have experience with the equity release process or even specialise in this area. Many specialising financial advisers frequently will be able to point you in the direction of competent equity release solicitors. 

How much do solicitors charge for equity release?

Equity release solicitor fees are around £1,000 including VAT to cover the standard scope of work involved with an equity release application. Prices can vary between locations and law firms, so you may want to do some research to find cost-effective deals without sacrificing on the quality of service. 

How much does it cost to release equity?

The cost of services from equity release advisers and equity release solicitors will cost around £2,000 at an absolute minimum. If you are taking out a larger loan and paying your adviser a percentage of the loan amount, these costs can be significantly more. 

There may be additional costs you have to pay in regards to the application, often relating to admin costs, an application fee and property valuation fees. 

Will a lifetime mortgage stop my state pension?

A common concern is that releasing a lump sum of your home equity will stop you from claiming a state pension. The basic state pension is not a means-tested benefit – i.e. it does not take into account your wealth to determine eligibility – and it will therefore not be taken away from you or reduced just because you receive a large loan. 

However, there are a handful of means-tested benefits which could be taken away or reduced when your wealth increases, such as Universal Credit, Council Tax Reductions and Pension Credit payments, which are used to top-up the State Pension for low-income individuals. 

Is equity release a good idea?

The only way to know for certain if equity release is a good idea for you is to source competent and professional equity release advice and legal counsel. You should start by doing your own research, which is why we have created lots of easy-to-read equity release content. 

Uncover more about equity release here!

We have plenty more about equity release here at MoneyNerd. We have more free content for anyone contemplating a lifetime mortgage, from the best equity release companies to guides discussing how much you could release using equity release. 

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