Equity release calculator
If you’re over 55 and want to be able to unlock some of the value of your home, equity release could help.
See what your options could be with our equity release calculator.
Equity release calculator
Are you a UK homeowner over the age of 55? Use our speedy, two-step calculator to find out how much equity you could release, and request your free equity release guide.
Equity Release Calculator
Are you a UK homeowner over the age of 55? Use our speedy 2-step calculator to find out how much you can release and request your free equity release guide.
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Why should I enquire?
- Rated ‘Excellent’ on Trustpilot.
- We will provide your results in two easy steps.
- We compare plans from across the whole market, from lenders approved by the Equity Release Council.
- Compare The Market have selected Responsible Equity Release as their only trusted equity release broker.
- We only offer plans that have a no-negative-equity guarantee, so you won’t have to worry about owing more than your home is worth.
Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690. A lifetime mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits. Our advisor will talk you through this and the setting up costs before you make any decision to proceed. Think carefully before securing other debts against your home.
How does the equity release calculator work?
The equity release calculator will give you an approximate idea of how much equity you might be able to release with a lifetime mortgage. It will only be an estimate, as the amount you can release will depend on:
- Other lending criteria
- The condition of your property
- Your age
- The lifetime mortgage you choose.
The free equity release calculator is provided by our equity release partner Responsible Equity Release.
What is an equity release mortgage?
An equity release mortgage is a type of loan secured against the value of your home. It enables you to unlock some of your equity in the form of a tax-free lump sum and/or payments, to achieve a variety of goals.
Equity release can help your plans become reality. For example, you could use the share of equity in your home to:
- Increase the value of your property with renovations
- Help the family with an early inheritance
- Pay off an existing mortgage
- Boost your disposable income.
However, equity release mortgages can be complex and don’t work in the same way as standard mortgages or loans. Equity release can also affect the inheritance you’re able to leave to your loved ones, as well as your eligibility for means-tested benefits.
Please get professional advice to help you understand the benefits and risks of equity release, based on your individual circumstances.
Use our equity release calculator to see how much wealth you could unlock from your property.
What types of equity release are available?
There are two main types of equity release – lifetime mortgages and home reversion plans.
Lifetime mortgages give the choice of either borrowing a one-off lump sum, or a lump sum followed by smaller amounts.
Home reversion plans allow you to sell all or part of your home, depending on your age, to the reversion company, in return for a regular income or a tax-free lump sum.
You might have to pay some rent, and you won’t get the full market value of your home.
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How is equity calculated?
Your home equity is calculated by subtracting your mortgage balance, as well as any other outstanding loans secured against your home, from the current value of your home.
Simply put, equity is the share of your home that you own outright, without owing a mortgage or loan secured on it.
For example, if your mortgage balance is £50,000 and your house is worth £250,000, you’ll have £200,000 equity in your property.
Most lenders will typically allow you to release between 20% and 50% of the equity, depending on your age. In general, the older you are, the more equity you’ll be able to release.
Where you live, the property type and your health may also influence how much you’re able to release.
Other factors that may affect the maximum equity percentage you can release include:
- Medically underwritten equity release plans – with one of these, your health and lifestyle will also be considered.
- Lenders’ fees – you may be charged an arrangement fee. This can usually be deducted from or added to the loan amount.
- Cashback equity release plans – some plans come with cashback incentives. You can use the extra cash for whatever you wish. You could even use it to help pay for the set-up fees.
- Joint vs single – if you’re married, most lenders may insist on a joint application. But you might prefer a single application if the house is in one name or one of you is below the age of 55, for example.
- Lodgers – there may be limited equity release plans available if you receive rent from someone living with you.
How much does equity release cost?
There are costs involved in setting up a lifetime mortgage, which could include:
- Fees for professional financial advice, which may involve a commission fee
- Valuation fees
- Solicitor’s fees
- Administration costs charged by a provider to set up the mortgage. These are often called lender, completion, arrangement or application fees.
You may also be charged early repayment fees if you pay off your loan early.
Once the lifetime mortgage is set up, you won’t have to make any repayments unless you choose to do so.
You’re guaranteed the right to make voluntary payments to help cut the costs of releasing equity.
How does a lifetime mortgage work?
A lifetime mortgage is the most popular form of equity release. If your home is worth more than any outstanding mortgage balance you may have, with a lifetime mortgage you could:
- Release some of the equity, tax-free, in cash
- Pay off any outstanding mortgage – if applicable
- Still fully own your own home and stay living there
- Make no monthly payments unless you choose to do so.
Equity release could work well for people who are asset-rich yet cash-poor. This is often because their home has gone up in value, but their pension and savings have been reduced by inflation and low interest rates.
There are two main types of lifetime mortgage:
1. Lump sum lifetime mortgage
You get a one-off, tax-free lump sum. Interest accumulates over the term and is repaid, along with the initial loan, usually from the sale of the property
2. Drawdown lifetime mortgage
You take an initial lump sum, as above, then create a reserve of equity to draw on in the future. Interest is only charged on the money that you’ve accessed. However, the money you access will be fixed at the interest rate at the time and so could be higher or lower than your initial rate.
Flexible features
You’re guaranteed the right to make payments with all lifetime mortgage products offered, whether that’s to clear the interest or reduce the amount borrowed. The type of payment is subject to lender criteria but is often allowed up to 10% of the initial amount borrowed per year.
Lifetime mortgages can also offer a variety of other features, helping homeowners to find a product tailored to their circumstances. These features may include:
- Inheritance guarantees – ringfence a portion of your home’s value to guarantee as a future inheritance. This will reduce the pool of equity available to you.
- Portability – move home in the future and take your lifetime mortgage with you. This is subject to the lender’s criteria.
- Fixed early repayment charges – no unforeseen costs in the future with fixed early repayment charges, offering the ability to plan and budget effectively for the future.
It’s very important to find the right lifetime mortgage for you and your personal situation. Seek professional advice to find out more about the equity release possibilities that could be available to you. You should also be able to get advice about how these possibilities could affect your future finances and the value of your estate.
Is a lifetime mortgage right for you?
If you want access to some extra cash without having to sell up and move house, using the equity in your home could be a good option. That said, it might not be the right choice for everyone.
Before you make any kind of decision, it’s important to get professional financial advice. This will help you weigh up the pros and cons to better understand what equity release could mean for you.
You could be eligible for a lifetime mortgage if:
- You’re over 55
- You own the home you want to release equity in, with no mortgage, or a small enough mortgage that you can pay it off with the released funds
- Your home is in good condition
- Your home is worth more than £70,000
- You want to borrow a minimum of £10,000.
What else should I consider before releasing equity?
With a normal mortgage, you pay interest monthly. But with a lifetime mortgage the interest rolls up every month and is added to the amount you released. Everything you owe usually gets paid back in one go. This will be once the house is sold or when the last homeowner on the deeds dies or goes into long-term care.
For example, let’s say at the age of 60, you own your property outright and have no existing mortgage. You take a lifetime mortgage of £50,000 at 5% and you don’t pay off any of the interest.
At the age of 70, you’ll owe the original £50,000, plus the compounded interest, making a grand total of £81,445.
At the age of 80, the total amount you owe will have risen to £132,665.
This means you won’t have the full current value of your home to leave to others. If this is important to you, you might want to consider an equity release plan that allows you to ringfence some of your home’s value as an inheritance for children.
You do have the option to repay early if you want to, but you might have to pay early repayment charges. If this is something you’re likely to want to do, consider a plan with fixed and defined early repayment charges.
All plans that meet the Equity Release Council product standards will also allow you to make voluntary payments to mitigate the cost of borrowing.
You can usually make payments up to 10% of the mortgage value per year (but this varies among lenders).
Anything you pay over this amount may also be subject to an early repayment penalty.
How does a home reversion plan work?
Let’s take the same example as earlier and say your home is worth £250,000. A home reversion plan provider might offer you £100,000 in exchange for 67% ownership of your home, should you not want to pay any rent.
Once the last homeowner dies or enters long-term care, the home reversion provider will claim their share of the property.
This will be 67% of its market value. So if your home had increased in value to £300,000, the provider would be owed £201,000 from its sale value. If the value remained flat at £250,000, the provider would still be owed £167,500.
If you want to know about the different types of equity release plans and the choices you have, our guide to equity release explains the differences and their benefits.
Compare the Market’s equity release partner Responsible Equity Release doesn’t advise on home reversion plans. The equity release calculator here is solely for lifetime mortgages.
If you’d like advice on a home reversion plan, you can find a qualified advisor at unbiased.co.uk.
What do I need to get a quote?
To use the equity release repayments calculator, you’ll need an estimate of how much your house is worth and some personal details.
If you want to go ahead and release equity from your home, an advisor from Responsible Equity Release will discuss your needs, current circumstances and what you want to achieve. They’ll work out a tailored solution to match what’s right for you in the long term.
Who is Responsible Equity Release?
Compare the Market’s equity release partner Responsible Equity Release** is authorised and regulated by the Financial Conduct Authority. It has access to plans from the whole of the market of equity release providers approved by the Equity Release Council, which sets standards and best practice for equity release lenders.
Go to Responsible Equity Release**Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference 610205.
Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690. A lifetime mortgage will reduce the value of your estate and could affect your entitlement to means-tested benefits. A Responsible Life advisor will talk you through this and the setting up costs before you make any decision to proceed.
Responsible Equity Release is not part of Compare the Market Limited. Compare the Market receives a % of the commission that our partner Responsible Equity Release earns.
Frequently asked questions
What information do I need to provide to use the equity release calculator?
To use the equity release calculator, all you need to give us is an estimate of how much your property is currently worth and what mortgage is outstanding, along with your contact details.
If you’re not sure how much your home is worth, you can get a rough idea by checking property websites like Rightmove. This will help you see how much similar properties, in a similar condition, are selling for in your neighbourhood.
Any lifetime mortgage lending depends on a satisfactory survey of your property on behalf of the lender. The legal paperwork will also need to be completed, which can take time. It’s sensible not to commit to any spending linked to your lifetime mortgage until the money is in your account.
Can I compare equity release plans?
If you want to know about the different types of equity release plans and the choices you have, see our guide to equity release that explains their differences and their benefits.
What does the no-negative-equity guarantee mean?
It means that you will never owe more than the value of your home – so there’ll be no lifetime mortgage debt left behind on the eventual sale of your home.
It works like this: once your home stops being your primary residence and is sold, the sale proceeds are used to pay off the lifetime mortgage and any interest that has built up. Once the loan has been repaid, any remaining money will be paid to your estate.
In the unlikely event that your home sells for less than the amount of the loan, the remaining balance will be written off.
What about moving to another property?
Releasing equity doesn’t mean that you can’t move home later on. All lifetime mortgages that meet the Equity Release Council product standards guarantee you the right to move home. You may be able to transfer your lifetime mortgage to your new home, but this is subject to the lender’s criteria.
You’ll also need to consider the costs of buying and selling, like:
- Estate agent fees
- Solicitor fees
- Stamp Duty
- Removal costs.
Will I be taxed on the equity I release?
No, you won’t be taxed on the equity you release. However, taking money out of your home will reduce the value of your estate and could affect your eligibility for means-tested benefits.
A fully qualified advisor will talk through all of this in detail before you commit to releasing equity.
How safe is equity release?
Equity release plans available today are much improved compared to those available in the past. Reputable companies abide by a code of conduct and best practice set by the Equity Release Council.
With better consumer safeguards in place, equity release can provide real financial security for older homeowners. However, it’s important to seek professional advice to make sure it’s the right option for you.
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