Instant Free Max Equity Release Calculator (Compound Interest)
You can use this Equity Release calculator to find out how much equity could be obtained from your home through Equity Release.
Releasing equity could help you with renovating your home, paying off any existing mortgage, increasing the disposable income, or supporting loved ones. Equity Release is also used to make payments on the mortgage or aid the family to purchase a home, or provide a cash lump sum.
Find Out How Much You Could Release.
Use Our Free Equity Release Calculator Today
Free Equity Release Calculator
Understanding Equity Release
Equity Release might sound complicated, but it’s really just unlocking the cash tied up in your home, and here’s the kicker—you don’t have to move out. Let’s break it down:
The magic starts at 55. From then on, the older you are and the more your home’s worth, the more cash you can unlock. It’s like getting rewards for your home being valuable and for having more birthdays. Everyone’s situation is a bit different. Got a health condition or a lifestyle factor like smoking? You may also be eligible for more.
In a nutshell, Equity Release can be a great way to tap into your home’s value for extra cash during retirement. Wondering how much you could get? Our free calculator can give you a quick peek based on your age and home’s value. It’s super easy and gives you a clear picture of what you could unlock.
Think of it as your home giving back to you. Ready to see how? Let’s dive in and find out together!
How to Calculate Equity Release
For the Equity Release calculator, you’ll need your property value and your age. From age 55 you could potentially release a minimum of 24.5% of your property’s value (rates vary between providers).
On average, on each birthday you can release an extra 1%, up to a maximum of 55%.
The amount that can be released is dictated by the borrower’s age, represented as a percentage of the home’s value (the youngest, if you are a couple). Older borrowers can normally receive larger sums.
Some Equity Release providers provide borrowers with better terms (i.e. more money) if they have a specific medical history or certain lifestyle habits, such as smoking.
What is a Good Equity Release Interest Rate Percentage?
According to the Autumn 2023 Market Report, the Equity Release Council reported that the average interest rates were 6.66% for lump sum equity release and 6.28% for drawdown lifetime mortgages, although the rate you will get will depend on individual circumstances and it’s best to seek financial advice.
Lifetime Mortgage Calculator Examples on a £200,000 Property Value
The amount of equity, and how much money, you are able to release is dependent upon the age of the youngest applicant, medical status, and the value of your home. The examples below use a home valuation of £200,000 to give the maximum equity that can be released.
How Much Equity Can You Release at Age 55?
At age 55 with perfect health, assuming your home is worth £200,000, the maximum equity you can release is £59,000. At age 55 with a medically enhanced rate, the maximum equity you can release is £87,200.
How Much Equity Can You Release at Age 60?
At 60 with perfect health, assuming your home is worth £200,000, the maximum equity you can release is £72,400. At age 60 with a medically enhanced rate, the maximum equity you can release is £99,000.
How Much Equity Can You Release at Age 65?
At age 65 with perfect health, assuming your home is worth £200,000 the maximum equity you can release is £82,600. At age 65 with a medically enhanced rate, the maximum equity you can release is £108,800.
How Much Equity Can You Release at Age 70?
At the age of 70 with perfect health, assuming your home is worth £200,000 the maximum equity you can release is £93,000. With a medically enhanced rate, the maximum equity you can release is £109,000.
How Much Equity Can You Release at Age 75?
At the age of 75 with perfect health, assuming your home is worth £200,000 the maximum equity you can release is £103,400. With a medically enhanced rate, the maximum equity you can release is £112,800.
What Factors Affect Maximum Equity Release?
The amount of available money that you can release is calculated by three factors: the youngest applicant’s age, the property’s value, any medical conditions you have, and the severity of each condition.
Below we’ll discuss some of the factors that can affect how much equity you can release. However, by far the biggest factor is your age. Simply put the older you are the more equity you can release.
Medical History
Having a certain medical history can impact the maximum amount of equity that can be released. You may be eligible for a medically underwritten Equity Release plan.
You may be eligible for an enhanced lifetime mortgage based on your height and weight, as measured by your body mass index (BMI). Generally, the more health conditions you have, the larger the maximum amount available for Equity Release.
To determine your eligibility, you will be required to complete a health and lifestyle questionnaire. The majority of qualifying poor health conditions are shared by all of the lenders and include things such as smoking details, high blood pressure, heart attack history, diabetes, Parkinson’s disease and cancer.
Your Age
Your age is the biggest determining factor in how much money or equity you can release from your home. Put simply the older you are the more equity you can release. If it’s a joint application the age of the youngest applicant is the one taken into consideration for the calculation.
The Location of Your Home
Where your home is located can affect your eligibility to release any equity from your home at all. There are fewer lenders in Scotland and Northern Ireland compared with England and Wales, this can impact your ability to be accepted for Equity Release.
If you live on an island that is still classed as the UK, or own a leasehold property type then this can also make it much harder to release equity as many lenders will not deal with homes outside of the mainland UK.
Living in Teesside? From Yarm’s historic charm to the lively vibe of Middlesbrough, it can be an ideal place for equity release. Our area’s a special blend of city buzz and countryside peace, and guess what? Lenders love that as much as we do.
What’s the Difference Between an Equity Release Calculator, and a Mortgage Calculator?
With a standard home mortgage calculator, the interest rate is typically based on the amount you want to borrow against the value of your home. This is known as Loan-to-Value, on average the higher the Loan-To-Value means the higher the interest rate.
When it comes to Equity Release, the most common method of calculating interest rates is by using a Lifetime Mortgage’. This means the interest rate is based on your age and will be fixed for life. The older the applicant then the higher the lifetime value you can borrow.
Another difference between housing mortgage calculators and Equity Release calculators is that in order to qualify for a housing mortgage, you must meet the affordability and credit requirements of the individual lender. These don’t apply when you’re releasing equity, and your credit score isn’t normally taken into account unless you intend to make regular repayments on the loan.
How is Lifetime Mortgage Interest Calculated?
Lifetime Mortgages typically feature fixed interest rates over a period of 12 months. The amount you release will accrue interest, which will accumulate over time (effectively meaning that interest will be charged on the interest). As a result, if you opt to let the interest on your equity release loan compound over time, the cost of equity release monthly repayments will rise.
Some lenders charge interest on the loans on a daily basis and add the interest to the balance every day. A professional financial adviser will know what method a provider uses and be able to calculate it and explain it best.
For instance, with roll-up Lifetime Mortgages (which provide you with tax-free cash in one lump sum), the interest on your loan is ‘rolled up’ and compounded monthly or annually, depending on the plan you select. This means that the balance owed to your Lifetime Mortgage provider increases year after year and you don’t have to make monthly payments.
The interest incurred is added to the original loan at the end of the first month or year (depending on your plan).
The following month or year, interest is compounded – that is, it is calculated on the original loan amount plus the interest charged during the previous month or year.
This process is repeated for each subsequent month or year.
So, even if the interest rate remains constant, the amount owed to your provider will be calculated monthly or annually based on the larger amount.
The loan is normally paid back upon the sale of your home when you pass away or go into long-term care. A guarantee against negative equity ensures that your estate will never end up in debt and is available from lenders who are members of the Equity Release Council.
Equity Release Without Compound (Rolled Up) Interest
There are two non-compounding ‘Rolled-up’ Equity Release plans. A Home Reversion Plan, which doesn’t pay interest; instead, it owns a percentage of your home and there is also a Lifetime Mortgage with monthly interest payments and a capital repayment at the end.
You make regular monthly direct debit payments with interest serviced plans. The payments you make will remain the same because the interest rate is fixed for life. Unlike a residential mortgage, there is no risk to your home if you cannot make your monthly payments.
Expert Equity Release Advice for Teesside Residents
We know Equity Release can be a big decision for you to make, which is why we’ve teamed up with the UK’s number one Equity Release adviser and member of the Equity Release Council, Age Partnership.
The Age Partnership adviser will make sure you understand all the options available to you.
Equity Release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration.
Equity Release requires paying off any outstanding mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.
