How Much Does Equity Release Cost In 2026

Equity release is a way of releasing the value of your home without having to move out. In 2026, understanding the costs of equity release is essential for making an informed decision.

The initial set-up costs for equity release include advice and application fees. Depending on the plan you choose, these fees can range from £1,500 to £3,000, according to Money Saving Expert. Additionally, interest rates on lifetime mortgages typically start from around 6%.

It’s also important to consider other costs associated with equity release, such as document preparation and legal fees, which vary depending on the provider. Credit report fees are usually between £30 and £50. Some providers may also charge loan origination fees.

When considering equity release, it’s wise to compare a few prices before deciding, as solicitor fees vary widely. Researching the types of plans available and their associated costs is key to determining whether equity release is right for you in 2026.

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How much does it cost to release equity in your home?

If you’re nearing retirement or already retired and own your home, equity release could help unlock the money tied up in it. This money can be used for your retirement or to support your family financially by tapping into your inheritance early.

As with any financial decision, you will have questions, and usually, the first one is how much does it cost to have a Santander equity release arranged?

There are a few fees involved. Some are payable upfront; others can be added to your loan or paid from the money released once an equity release plan is completed.

The fees are variable and will include three services:

Your financial advisor’s fees

Specialist financial advice is required before taking out an equity release plan. The fees vary by financial advisor and are usually paid after the plan is completed.

Some advisors charge a fixed fee, while others charge a percentage of the total amount released. Figures from April 2021 issued by the Equity Release Council show that the average lump-sum payment customers released was £96,483, and for those using drawdown, the initial payment taken averaged £64,797.

The percentage of funds released as fees can be 1.95%. If you were to release a lump sum of £ 96,483, the fee payable would be £1,881.42 at a 1.95% fee. When a percentage is used to calculate fees, check for minimum fees, as releasing £10,000 may be subject to a minimum flat fee of £995 or more.

Financial advice fees don’t always need to be paid upfront. Many are paid on completion; some advisors provide a no-completion, no-fee service. Others charge for advice regardless of whether your plan is completed and you receive funds.

The lender fees

Lenders will charge arrangement fees to cover their costs, such as arranging a property valuation and the legal costs of setting up your plan. Depending on the lender you choose, there can also be an application fee to begin the application process.

Generally, lender fees are around £995, including legal, application, and surveyor fees. Like your advice fee, lenders can charge their fee on completion or add it to the loan amount.

Remember that any fees you add to your loan will be subject to compound interest, which will increase the cost as the interest accrues on the entire balance over the life of the plan.

Regarding the surveyor costs, equity release providers base the maximum you can release on your property’s current market valuation. Your home needs to be in good repair to be used as security.

Suppose the surveyor identifies any issues affecting your home’s structural integrity. In that case, you may be required to have repairs carried out to bring your house up to standard before it can be accepted as security.

Where necessary repairs are identified, this could substantially increase the cost. Funds released for home repairs may be used, but the provider will need to agree to this before approving the release of funding.

Your solicitor’s fee

You must meet two legal requirements for setting up an equity release plan. First, you need to meet face-to-face with a solicitor; second, the solicitor you choose must be independent.

That means that, unlike typical mortgage products, where the lender can provide free legal services from their panel of solicitors, that’s not possible with equity release solicitors. There can be no affiliation between the lender and the solicitor acting on your behalf.

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Typical solicitors’ fees for equity release are around £1,000. You’ll be required to bring ID verification to the face-to-face meeting.

Your solicitor must verify your identity to comply with UK anti-money laundering legislation. Once your ID is confirmed, it’s the solicitor’s job to check the details on the property’s title deeds to ensure they are correct and up to date and that you have sufficient building insurance in place.

Your solicitor only starts work after a lender has provided an initial offer for you to accept. When you receive your offer and are happy to proceed, that’s when to make an appointment with an independent solicitor to oversee the process. If you have an existing mortgage to be paid off, your solicitor will also handle this for you, paying the balance after all fees due are settled by bank transfer.

A solicitor can only oversee the legalities of your plan, but cannot advise on any aspect of it. Only a financial advisor can advise you on financing options. While any conveyancing solicitor can act as your independent solicitor, working with someone specialising in equity release is worthwhile.

There’s an organisation called the Equity Release Solicitors’ Alliance (ERSA). Equity release solicitors are all members of the Equity Release Council and therefore have more experience in this type of finance. You can find a list of members on their website – ERSAlaw.co.uk. You aren’t required to use an ERSA law member, but you need an independent solicitor to act in your best interest.

Stamp Duty Fees

While all providers will tell you the money released is tax-free, it is not always clear whether it is subject to stamp duty. This becomes an issue if you release over the threshold, which, as of 2026, is £125,000.

If you release equity over £125,000, a 2% stamp duty tax may be incurred, depending on your personal circumstances. The rates increase to 5% for funds released between £250,001 and £925,000, with higher rates for larger sums.

These rates apply to residential homes that serve as your primary residence, not to second homes. If you’re using an equity release provider that allows for equity release on a second home, a stamp duty of 3% applies to all funds released up to £125,000, then increases to 5% for funds released above that figure.

Your financial advisor will discuss stamp duty with you from the outset if it applies to your situation.

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How much does it cost to ‘arrange’ equity release?

Arranging an equity release plan or lifetime mortgages for people over 55 usually costs between £2,000 and £3,000. The total cost of equity release will be much higher when you factor in compounded interest rates. The two to a few thousand it costs to get your funds only start your plan. The real cost is what accrues over the life of the lifetime mortgage, as interest is charged on the interest that has accrued.

Most providers state they use compounded interest. To be clear, continuously compounded interest applies to the capital owed plus interest. In practice, using equity release for a lump sum payment of £10,000 at a fixed rate of compound interest of 4.5% applied annually would cost £450 in the first year, £470.25 in the second year, £491.42 in the third year, and so on.

By year five, an initial £10,000 equity release plan would have climbed to a balance of £12,461.82. As you can see, from the initial interest of £450 in the first year, the total interest charges over five years increase to £2,461.82.

That’s based on a minimum of £10,000. The average customer release is far higher, so the effect of compound interest must be understood before entering into an equity release plan. It’s also why the Equity Release Council require all providers to have a no negative equity guarantee, as, without it, costs would surely escalate beyond your home’s value.

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How 1st UK Can Help You Release Cash Tied Up in Your Home

The 1st UK is experienced in retirement planning and knowledgeable of the equity release market. We operate independently, so we’re well-positioned to provide our customers with a whole market comparison and review all the equity release companies to find the best rates on the best terms with guarantees for you and your family’s financial protection.

Contact a team member today to find out exactly how we can serve you and if we can unlock cash tied up in your home to help you fund your retirement years.

Sources:
https://www.legalandgeneral.com/retirement/equity-release/costs/
https://www.onefamily.com/equity-release/how-much-does-it-cost/
https://www.moneysavingexpert.com/mortgages/equity-release/

Author: Steve Case – Mortgage and Loans Expert

Reviewed & Fact Checked By: Alise Brown