An equity release calculator is an online tool designed to estimate the amount homeowners can release from their property.
This article will outline the workings of these types of calculators, their significance in equity release considerations, and guide you through obtaining an estimate.
The article will help you do the following:
Here are 7 key takeaways from this article:
Using the Equity Release Calculator is a straightforward process designed to estimate how much equity you could potentially release from your home. Here’s a step-by-step guide to ensure you get the most accurate estimate possible.
Start by entering basic information about your property, such as its type (e.g., detached, semi-detached, terraced, flat) and estimated current market value. This information helps the calculator determine the amount of money you could release.
Your age is a crucial factor in calculating equity release, as it influences the loan amount you’re eligible for. Enter the age of the youngest homeowner if the property is jointly owned, as this will affect the calculation.
Once you’ve inputted the necessary details, the calculator will estimate the maximum amount you could release from your home. Remember, this is just an estimate and not a guaranteed offer.
After receiving your estimate, consider your next steps carefully. Discussing your options with an independent equity release adviser who can provide personalised advice based on your specific circumstances is advisable.
You can use the free equity release calculator below. This only asks you for the basic information to allow you to get an estimate.
Try Age Partnership’s equity release calculator and estimate how much money you could release from your property.
If you take out a product from Age Partnership, we will receive a fee for introducing you to them. This helps support the site and for us to produce more content.
In March 2024, a comprehensive study by the UK Care Guide revealed that many retirees are increasingly looking towards equity release as a supplemental source of retirement income.
According to the survey, which gathered insights from 1,803 individuals aged 55 and above, 40% of respondents consider equity release as a means to enhance their financial security in retirement.
This trend highlights a growing appreciation for the potential of home equity as a critical element in retirement planning.
However, enthusiasm for equity release is tempered by concerns over the associated costs, particularly the apprehensions about interest rates cited by 42% of those surveyed.
Saq Hussain, a financial expert at the UK Care Guide, provided his perspective on the findings, saying, “Our March 2024 study points to a clear interest in equity release among retirees, alongside a significant need for education on its costs and benefits.”
The Equity Release Calculator uses the information you provide about your property and personal circumstances to calculate an approximate amount of equity. Therefore, this estimates potential equity release amounts.
The main inputs required are your age, property value, and any outstanding mortgage or other debts.
The age of the youngest homeowner is one of the key factors. This is because most lifetime mortgage products have a minimum age requirement, which is usually 55 years old. You can release more money if the youngest applicant is older.
The property type and its value play a significant role too. This is because the more your property is worth, the higher the potential equity release. However, certain property types may be excluded by some lenders.
For instance, a holiday home or a buy-to-let property will not be acceptable for some equity release products.
The calculator also considers any existing mortgage or debts secured against your property.
These will need to be repaid upon release of the money, reducing the net lump sum you can receive. If there are no other debts against the property, you can benefit from the full amount calculated.
Although the Equity Release Calculator is a simple tool, some of its calculations are complex. It considers the accumulated compound interest over the years and the negative equity guarantee offered by lenders who are members of the Equity Release Council.
An Equity Release Mortage Calculator can help homeowners to decide whether equity release is an option worth exploring further. The estimated figures will allow people to consider what financial aid their property can provide.
The calculator provides a clear idea of the approximate loan amount. Therefore, it can help you plan your retirement income by understanding how much tax-free cash you could release.
The figures can be used to discuss your options with an equity release adviser, laying the groundwork for your equity release options.
It is also necessary to note that equity release can impact eligibility for means-tested benefits and inheritance tax.
Using the calculator can also save you time. Providing an instant estimate quickly indicates whether equity release could be a viable option for you.
If the estimated loan amount is significantly less than you need or were expecting, you may need to consider alternatives.
Furthermore, Equity Release Calculators do not account for early repayment charges, which can be substantial.
Consequently, ensure that you have factored these fees into decisions around equity release.
Although Equity Release Calculators are useful tools, it’s important to understand their limitations. The figures provided are estimates based on general assumptions.
Therefore, they cannot account for all equity release product options that are available, or the specific criteria of all lenders.
For instance, most calculators won’t consider any enhanced or medically enhanced plans that you have.
This can allow you to release more equity. Also, some lenders might offer more favourable terms depending on the location and type of your property, yet the calculator cannot consider this.
Moreover, the estimated amount assumes releasing the maximum equity. This could affect eligibility for benefits such as Pension Credit, as well as reducing potential inheritance. Therefore, it’s important to seek advice on appropriate release amounts.
Finally, the interest rate used by the calculator is usually a general average.
However, the actual interest rate you are offered may be higher or lower. The rate will affect the total cost of the loan and the growth of debt over time.
Despite these limitations, Equity Release Calculators are a useful starting point. They provide a rough idea of your options, helping inform your discussions with professional advisers.
Popular calculators include those for lifetime mortgages, interest-only mortgages, home reversion plans and enhanced lifetime mortgages.
The most common is the Lifetime Mortgage Calculator. This is designed specifically for the lifetime mortgage, the most popular form of equity release. It calculates the potential lump sum based on the age of the youngest homeowner and the property value.
There’s also the Interest-Only Mortgage Calculator, used to calculate the potential monthly payments. Unlike the standard lifetime mortgage, this product requires you to make regular interest payments, reducing the final amount to repay.
The Home Reversion Calculator is another tool, used for a less common form of equity release. This calculator estimates the percentage of your home’s value that you could sell to a home reversion company, in exchange for either a lump sum or regular payments.
The Enhanced Lifetime Mortgage Calculator considers health and lifestyle factors.
If you have certain health conditions or habits, such as smoking, you may be able to release more equity. This calculator estimates the additional amount you could be entitled to.
It is also worth noting that not all calculators are available on all websites. In addition, the accuracy of the calculators can vary. It is recommended to use them as an initial guide and seek advice from a qualified equity release adviser for a personalised illustration.
Finally, it’s important to note that although helpful, these calculators only provide estimates.
For bespoke advice and illustrations tailored to your situation, it is necessary to consult an independent equity release adviser .
Some of the Best Equity Release Interest Rates as of 11 March 2024
The table below shows you some of the best equity release rates, as of 24 February 2024, for lifetime mortgages from some of the leading equity release providers in the UK.
Provider Name | Product Name | Interest Rate | Type of product | Offers | |
---|---|---|---|---|---|
Standard Life | Horizon 200 Drawdown | 5.37% | Fixed | Free Valuation | |
Standard Life | Horizon 220 Drawdown | 5.38% | Fixed | Free Valuation | |
More2Life | Capital Choice Ultra Lite Drawdown 1 | 5.51% | Fixed | Free Valuation No application fee |
|
Scottish Widows | FR1 | 5.60% | Fixed | Cashback Free Valuation No application fee |
|
Standard Life | Horizon 280 Drawdown | 5.65% | Fixed | Free Valuation | |
Scottish Widows | FR2 | 5.67% | Fixed | Cashback Free Valuation No application fee |
|
Legal & General | Interest Roll-Up 4 | 5.69% | Fixed | Free Valuation | |
Legal & General | Optional Payment 4 | 5.69% | Fixed | Free Valuation | |
Standard Life | Horizon 280 Drawdown Fee Free | 5.70% | Fixed | Free Valuation No application fee |
|
Standard Life | Horizon 280 Lump Sum Fee Free | 5.70% | Fixed | Free Valuation No application fee |
The equity release rates have been sourced by UK Care Guide from the Equity Release Supermarket website. These rates may have changed since this table was created and should be taken as indicative only. There may be other providers not listed on this table that could offer better deals. In addition, the providers and products noted may not be right for your particular circumstances. Therefore, they should only be taken as a guide, and we cannot guarantee their current accuracy. Please also note that we do not provide advice on or endorse any particular product listed here. The rate you are offered will depend on your individual circumstances and subject to lender approval. Therefore, we strongly recommend that you speak to an equity release adviser, who will be able to provide you with information on the latest rates that apply to you.
Speak To An Equity Release Specialist Today
Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements and see what deals are available to you.
Interpreting the results from an Equity Release Calculator is straightforward. The calculator typically provides an estimated maximum lump sum that you could potentially release from your home, based on your provided details.
However, the figure is an estimate, and the actual amount will depend on the terms and conditions of the chosen provider. Consequently, the figure should be a free guide, not a guaranteed offer.
Finally, it is crucial to consider the equity release interest rate indicated by the calculator. This is usually an average rate, with the actual rate you’re offered potentially being higher or lower.
The interest rate will significantly impact the total cost of the loan and the final amount you have to pay back.
When using an Equity Release Calculator, it often refers to interest rates such as the Annual Equivalent Rate (AER) and Monthly Equivalent Rate (MER). These rates are used to calculate the estimated interest accumulating on top of the loan over time.
The AER is the annual interest rate. The MER, on the other hand, is the interest rate calculated on a monthly basis.
It is important to note that interest on equity release products is usually compounded, which means interest is charged on the original loan amount and the accumulated interest.
The calculator might also provide information on potential monthly repayments. These are regular payments you can choose to make to reduce any build-up of interest. Although these are voluntary payments, making these payments can reduce the overall cost of the loan.
Equity Release Calculators are useful tools, it’s important to understand their limitations. The figures provided are estimates based on general assumptions.
Therefore, they cannot account for all equity release product options that are available, or the specific criteria of all lenders.
For instance, most calculators won’t consider any enhanced or medically enhanced plans that you have.
This can allow you to release more equity. Also, some lenders might offer more favourable terms depending on the location and type of your property, yet the calculator cannot consider this.
Moreover, the estimated amount assumes releasing the maximum equity . This could affect eligibility for benefits such as Pension Credit, as well as reducing potential inheritance. Therefore, it’s important to seek financial advice on appropriate release amounts.
Finally, the interest rate used by the calculator is usually a general average.
However, the actual interest rate you are offered may be higher or lower. The rate will affect the total cost of the loan and the growth of debt over time.
Despite these limitations, Equity Release Calculators are a useful starting point. They provide a rough idea of your options, helping inform your discussions with professional advisers.
Popular calculators include those for lifetime mortgages , interest-only mortgages, home reversion plans and enhanced lifetime mortgages.
The most common is the Lifetime Mortgage Calculator . This is designed specifically for the lifetime mortgage, the most popular form of equity release. It calculates the potential lump sum based on the age of the youngest homeowner and the property value.
There’s also the Interest-Only Mortgage Calculator , used to calculate the potential monthly payments. Unlike the standard lifetime mortgage, this product requires you to make regular interest payments, reducing the final amount to repay.
The Home Reversion Calculator is another tool, used for a less common form of equity release. This calculator estimates the percentage of your home’s value that you could sell to a home reversion company, in exchange for either a lump sum or regular payments.
The Enhanced Lifetime Mortgage Calculator considers health and lifestyle factors.
If you have certain health conditions or habits, such as smoking, you may be able to release more equity. This calculator estimates the additional amount you could be entitled to.
It is also worth noting that not all calculators are available on all websites. In addition, the accuracy of the calculators can vary. It is recommended to use them as an initial guide and seek mortgage advice from a qualified equity release adviser for a personalised illustration.
Finally, it’s important to note that although helpful, these calculators only provide estimates.
For bespoke financial advice and illustrations tailored to your situation, it is necessary to consult an independent equity release adviser.
Equity release schemes in the UK are subject to a comprehensive legal and regulatory framework designed to protect consumers. Understanding these regulations can provide peace of mind and assurance of the legitimacy and safety of these financial products.
The equity release market is regulated by the Financial Conduct Authority (FCA), ensuring that lenders and advisers adhere to strict standards of conduct. The FCA’s oversight guarantees that all equity release products are transparent, fair, and designed with the consumer’s best interests in mind.
Additionally, the Equity Release Council (ERC) sets out further standards and principles that its members must follow. These include providing customers with a ‘no negative equity guarantee‘, ensuring that you will never owe more than the value of your home. Members must also offer clear and comprehensive product information, allowing consumers to make informed decisions.
These regulatory bodies work together to safeguard consumers, offering protections such as the right to remain in your property for life or until you move into long-term care, and ensuring that equity release plans are clear and understandable.
Before entering into any equity release agreement, you must check that you are using a regulated provider.
Understanding the legal and regulatory environment of equity release can help you navigate your options more confidently, knowing that stringent protections and standards are in place.
Seeking independent equity release advice is critical in the process. An independent adviser can provide unbiased information and guidance tailored to your circumstances, ensuring you make an informed decision.
Independent advisers are not tied to any specific equity release provider, which means they can access and compare products from across the market to find the one that best suits your needs.
They can also explain the features, benefits, and risks of different equity release plans in detail, helping you to understand how each option could impact your financial situation.
A financial adviser will assess your overall financial situation, including your income, savings, and entitlement to benefits. This approach ensures that any advice given considers your financial health and future needs, which in turn helps you decide what the best option is for you.
A Joint Lifetime Mortgage is a type of equity release plan that allows couples to release equity from their main residence together.
The Equity Release Calculator significantly estimates how much money you could release as a couple.
It is important to note that releasing equity through a joint lifetime mortgage can potentially affect your eligibility for means-tested benefits. Therefore, once again, discussing this with an equity release adviser before making any decisions is essential.
Finally, it’s worth considering the implications of early repayment charges. These are fees that lenders may charge if you decide to repay your joint lifetime mortgage early.
Although the Equity Release Calculator will not typically provide information on these charges, they are important considerations to raise with an equity release advisor.
Equity release can have significant implications for your financial future, particularly concerning inheritance and eligibility for means-tested benefits. It’s crucial to understand these impacts before proceeding.
Equity release reduces the value of your estate, which can affect the amount of inheritance you leave to your beneficiaries. If preserving wealth for your heirs is important to you, consider how the amount you plan to release might impact their inheritance.
Releasing equity from your home may affect your eligibility for means-tested benefits. The extra cash could be counted as capital, potentially disqualifying you from receiving certain benefits or reducing the amount you’re entitled to. Before deciding, review your current and future eligibility for benefits such as Pension Credit and Council Tax Support.
It’s advisable to discuss these considerations with an independent financial adviser who can provide tailored advice based on your circumstances and help you weigh the pros and cons of equity release with your inheritance and benefits.
The article provides a comprehensive overview of equity release calculators, illustrating their functionality, benefits, and limitations. To summarise:
They are essential tools for homeowners looking to understand how much they could release from their property.
Despite their usefulness, these calculators only offer a starting point. Personalised advice from an independent adviser is crucial for making informed decisions about equity release.
Equity release impacts inheritance and eligibility for means-tested benefits. It’s vital to consider these factors carefully.
We recommend the following actions for readers considering equity release:
These steps will ensure you make the most informed and beneficial decision regarding equity release.
The UK Care Guide works in partnership with Boon Brokers, one of the UKs leading equity release specialists.
You can contact them on 0333 567 1607 , or use the equity release calculator to estimate how much you can borrow.
Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements.
.
All equity release and mortgage advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation. By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.
The fee we receive is used to help keep this site operational and to produce new content.
Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Saq is a financial expert, and is responsible for the day-to-day running of the UK Care Guide website. Prior to taking on the operation of this site, Saq was a Director and the UK Head of DC Pensions, Benefits and Wellbeing at PwC. Saq is also a part of the steering group at the Living Wage Foundation that has developed the UK’s National Living Pension standard.
Saq has regularly featured in the press, with examples including:
UK Care Guide is really proud to have been featured on some of the UK’s leading websites.
Where applicable, the adverts for Boon Brokers on this page have been signed off as a Financial Promotion by Boon Brokers Limited, to ensure that they are in compliance with Section 21 of FSMA. Boon Brokers Limited is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
The Age Partnership equity release calculator has been approved and provided by Age Partnership. Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432.