Equity Release Calculator
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Use our equity release calculator to see what you could get by releasing equity from your home.
With over 200 products to choose from - offering flexible lending solutions, LTVs (loan to values) as high as 58% and generous cash back deals available too - equity release could provide a later life lending solution for you.
Fill the short form below to get indicative quotes on what you might get from your home.
Equity release lenders gives homeowners aged 55+ the option to turn the equity built up in a property into tax-free cash without selling up or downsizing. You continue to own the property 100%, keep the deeds in your name and have the right to remain in your property for life.
- Equity Release Service for People Aged 55 to 95
- Access to exclusive equity release scheme deals
- Choice of face-to-face or telephone advice
- Plans from the whole of the marketplace
- Initial discussion is without obligation
- Plans laid out clearly with all the options explained to you
- Use our equity release calculator to get an indicative quote
Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration.
Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.
Understanding Equity Release Calculators: A Guide for Homeowners
As a homeowner, you may have considered using equity release to tap into the value of your property and use it to fund retirement, pay off debts, or make home improvements.
Equity release refers to a range of financial products that allow you to access the equity (or value) in your home while continuing to live there. These products typically involve taking out a mortgage or loan against your property and repaying the loan when you sell the property or pass away.
When considering equity release, it's essential to understand how these products work and how they may impact your financial situation. One helpful tool for evaluating your options is an equity release calculator. These calculators allow you to input information about your property and financial position and receive estimates of how much equity you can access and the potential costs involved.
This article will provide an overview of equity release and how it works, explain the different types of equity release products available, and discuss how to use an equity release calculator to make informed decisions about your finances. We will also touch on the risks and benefits of equity release and some alternatives to consider.
What is Equity Release?
Equity release is a financial product allowing homeowners to access their property's equity.
The equity of a property represents the difference between its value and any outstanding mortgages or loans.
For example, if your property is worth £700,000 and you have a mortgage of £150,000, you have £550,000 in equity.
There are several ways homeowners can access this equity, including taking out a equity release mortgage, retirement interest only mortgage or a home equity line of credit (HELOC). These products generally involve taking out a loan against your property, which is repaid when you sell the property or pass away.
With a home equity release mortgage, homeowners over 55 can borrow from their homes' equity and receive funds in the form of a lump sum, a loan, or a monthly payment. These loans typically only have to be repaid once the borrower sells the property or passes away. The lender is then repaid from the sale proceeds of the property.
Home equity loans or HELOCs provide borrowers with a lump sum or a line of credit that can be used for any purpose. The borrower must then make regular payments to the lender to repay the loan, including interest.
It's important to note that taking out an equity release product can have significant consequences for your financial situation. It's essential to carefully consider the terms of the loan, including the interest rate, fees, and repayment terms, before making a decision.
Using an Equity Release Calculator
An equity release calculator is a tool that allows homeowners to estimate the amount of equity they may be able to access through an equity release product, as well as the potential costs involved.
These calculators can be found online and are generally easy to use, requiring you to input information about your property, financial situation, and the type of equity release product you are considering.
When using an equity release calculator, you may be asked to provide the following information:
- The value of your property
- The outstanding balance on your mortgage or any other loans secured against the property
- Your age and the age of any other borrowers on the loan
- The type of equity release product you are considering (e.g., equity release mortgage, retirement interest only mortgage, or a home equity loan, HELOC)
- The interest rate and any fees associated with the product
Based on this information, the calculator will provide an estimate of the amount of equity you may be able to access, as well as the potential costs of the loan, including any interest and fees.
It's important to note that these estimates are just that - estimates. The amount you can borrow and the costs involved may vary based on your circumstances and the lender's requirements.
Using an equity release calculator as part of your research and decision-making process is a good idea. Still, it's also essential to consult with a specialist mortgage broker before proceeding with an equity release product. These professionals can help you understand the risks and benefits of equity release and assist you in making an informed decision about your finances.
Equity Release and Mortgages
Equity release products involve securing a loan against your property. These loans are similar to traditional mortgages because they allow you to borrow money using your home as collateral. However, you should know some critical differences between equity-release and conventional mortgages.
One significant difference is the purpose of the loan. A traditional mortgage is typically used to purchase a home or refinance an existing one. Alternatively, equity release mortgages allow you to access your home's equity for other purposes, such as funding retirement or paying off debt.
Another difference is the repayment of the loan. With a traditional mortgage, you must make regular payments to the lender to repay the loan, including interest, over a set period.
With an equity release mortgage, the loan is generally only repaid once the borrower sells the property or passes away. The lender is then repaid from the sale proceeds of the property.
It's important to carefully consider the terms of an equity release mortgage before proceeding. These products may have higher interest rates and fees than traditional mortgages and may impact your ability to sell or pass on your property in the future.
Understanding Interest Rates and Equity Release
An equity release mortgage's cost is heavily influenced by interest rates, and the amount of equity you can access depends on them.
The interest you pay the lender for borrowing money is expressed as a percentage of the loan amount. A higher interest rate means you will have to pay more for the loan.
Interest rates for equity release mortgages may be fixed or variable. The rate on a fixed interest rate remains constant throughout the life of the loan, while the rate on a variable interest rate may fluctuate depending on market conditions.
Equity release interest rates are generally higher than traditional mortgages due to the increased risk to the lender. With a conventional mortgage, the borrower must make regular payments to the lender to repay the loan.
An equity release mortgage is typically repaid once the borrower sells the property or passes away. As a result, lenders may charge a higher interest rate to compensate for this increased risk.
The interest rate on an equity release mortgage may also depend on the applicant's age and the property's value.
Older borrowers may be offered lower interest rates due to the shorter repayment period. At the same time, the property's value may impact the lender's risk and, in turn, the interest rate offered.
It's essential to consider the interest rate carefully when evaluating your equity release options and to shop around to find the best rate available. It's also a good idea to seek the advice of a specialist equity release adviser before proceeding with an equity release mortgage.
Different Types of Equity Release
A lifetime mortgage is a type of equity release product that permits homeowners to access the equity in their homes while still living in them.
With a lifetime mortgage, homeowners take out a loan secured against their property, which is repaid when the borrower sells the property or passes away.
Lifetime mortgages are designed to provide homeowners with a source of cash in retirement, pay off debts, or make home improvements.
When it comes to accessing equity, they are often used instead of downsizing or selling a house.
There are several types of lifetime mortgages available, including:
- Standard lifetime mortgage - This is the most common type of lifetime mortgage and allows homeowners to borrow a lump sum or a series of smaller amounts over time. The loan is typically repaid when the borrower sells the property or passes away
- Interest-only lifetime mortgage - With this type of mortgage, the borrower only pays the interest each month and does not have to make any principal payments. The loan is repaid in full when the borrower sells the property or passes away
- Enhanced lifetime mortgage - These mortgages are designed for older borrowers or those with certain health conditions and may offer a higher loan amount based on the borrower's life expectancy or health status
It's important to carefully consider the terms of a lifetime mortgage before proceeding, including the interest rate, fees, and repayment terms.