What Are The Set Up Costs For Equity Release Loans?
Equity release set up costs are an important part in any decision making process. Most equity release schemes will have a standard mix of set up costs which can vary significantly between lenders. It is therefore essential the best equity equity release deals are compared using a combination of the interest rate offered by the provider & the mortgage fees charged. The various set up fees charged during application stage are: –
1. Valuation Fee – To ascertain the property value & the consequent amount of home equity that can be released a survey needs to be conducted. This will serve two purposes; a market appraisal based on similar properties that have sold & to ensure the property provides good security for the equity release company. A valuation report is produced following the surveyors analysis of the property. Any valuation fee due is payable upon application and the cost is usually based & relative t0 the valuation figure of the property.
Great Tip! – Always check whether a FREE or subsidised valuation is on offer from the lender
2. Lenders Application Fee – to cover their costs in setting up the equity release plan, lenders will usually charge an application fee which can vary anywhere between £500 upto £995 dependent upon the equity release company. This arrangement fee is either deducted from the release upon completion, or can be added to the loan, which can be useful if the maximum equity release is required. Again do check between lenders as some companies can have a ‘no application fee’ offer at certain times.
Great Tip! – If adding any equity release costs onto a loan it will cost more in interest over the longer term
3. Solicitors Legal Costs – as part of the Equity Release Council codes of conduct, the lender & the consumer must have separate legal representation. It is always wise to seek a solicitor who is a member of ERSA as they practice equity release legals on a daily basis & many come with fixed solicitors fees. These can start from as little as £375 + VAT & disbursements and starting from January 2014 a face-to-face visit is required to complete the equity release legal process.
Great Tip! – Always get a quote before proceeding & check with your equity release adviser for a recommendation
4. Equity Release Advisers Fee – all equity release companies will only accept an application following receipt of advice from a qualified equity release adviser. This will be to ensure the right plan is being taken for the right reasons & with the correct lender. To offer best advice an equity release adviser will conduct research from the whole of the market to find the best deal. The cost of this specialist advice will be passed on by the adviser charging an advice fee which is usually payable upon completion of the application. The advice fee can vary anywhere between £500 upto £1495, but we always advise to shop around.
Great Tip! – Never accept upfront application fees & ensure ALL costs are disclosed by the advisers IDD at the outset