Equity release calculator

equity release calculator

This page was last updated on 1 October 2020

Equity release calculator

You may be considering the possibility of equity release from your home. This could be either to help out a younger family member, pay for care, or simply to top up your pension.

If this is the case, you are probably wondering how much tax-free cash you can borrow.

A UK equity release calculator can help you calculate how much money you can receive. This article explains everything you need to know about what an equity release calculator is, how it works, and the different types you can get.

Topics that you will find covered on this page

What is an equity release calculator?

Most kinds of equity release calculator online are free to use.  All you have to do is fill in some basic information about your individual circumstances, and you will be shown an instant quote.

The questions you need to answer will depend on whether you are interested in equity release with a lifetime mortgage or home reversion plan.

Both types of equity release are authorised and regulated by the Financial Conduct Authority and the Equity Release Council trade body. These two bodies build legal protections into your product.

For example, the Equity Release Council builds in a no negative equity guarantee, meaning that you will never owe more to the provider than the total value of your home. The Equity Release Council no negative equity guarantee can help reduce worries about inheritance or future debt for your family.

Here is a short video that explains how an equity release calculator works.

Lifetime Mortgages

A lifetime mortgage is a loan secured against the value of your home. Lifetime mortgages are currently the most popular type of equity release. The money you borrow can either be one lump sum, or a series of withdrawals that can form an extra regular income in retirement.

You do not need to sell your home or make any monthly interest repayments when taking out a lifetime mortgage. Instead, your property will by sold either after your death and the debt, including all interest that has accrued, will be paid off using the proceeds from the sale.

The exact amount of money you receive via equity release with a mortgage depends on the value of your property and the lender’s loan-to-value rates. Interest rates also vary between equity release mortgages providers and packages, but the average rate in 2020 is between 2 and 6% AER.

A lifetime mortgage calculator is a tool you can use to give you an instant quote for how much cash someone of your profile can usually unlock from their home.

You will usually need to provide the following information for the equity release mortgage calculator to work:

  • The value of your main residence. The property your loan will be secured against must be worth at least £70,000.
  • Your address or postcode in the UK.
  • Whether you have any other mortgages outstanding.
  • Your age. You must be at least 55 years old to take out a lifetime mortgage.
  • Your gender, as well as whether or not you are married.

 

If you provide your name and contact details, you may later be sent a personalised quote based on any extra information you provide.

Different lifetime mortgage schemes also have different features. You may want to compare companies in the calculator’s online guide to see how much money you could unlock from the value of your house depending on whether you get a drawdown, roll-up, or flexible lifetime mortgage.

As with any kind of equity release, you must contact an independent financial adviser. This is a legal requirement.

This professional money expert will be able to guide you through any questions you may have about the mortgage, and help you find the best deal for your particular needs. They will also be able to explain how a lifetime mortgage may affect your state benefits, tax position, and pension credit in retirement.

free equity release calculator

Home Reversion Plans

Home reversion is when you sell part of your home to a mortgage company. You do this in exchange for a sum of tax-free money.

Unlike a lifetime mortgage, the cash you get is not a loan, so there is no interest to pay. The larger the share of the property that you sell, the more money you will get from the reversion.

Home for life schemes are regulated. A lifetime tenancy agreement will be signed, promising that you can continue to live in your home rent free for the rest of your life, until you either die or move into long-term care. Knowing this can reduce worry in retirement.

A home reversion free equity release calculator is a tool that helps you estimate the lump sum you could receive by taking out a home for life plan.

To calculate how much money you could get, the equity release calculator will need access to personal details such as:

  • The age of the youngest homeowner in your property. You must be at least 60 years old to be eligible for this type of equity release.
  • Your martial status. This information is used as a simple way of finding out whether you will be making a single or joint application.
  • Your gender.
  • Your property’s value. You must be releasing equity in a house worth at least £80,000 to qualify for this kind of equity release plan.
  • Your postcode is also needed, as regulations and rates vary depending on where you live in the UK.
  • The percentage of your property’s value that you are hoping to release.

 

The reason the equity release calculator needs this information is that equity release plans have strict lending criteria.  Applicants must meet these conditions in order to be eligible for the plans.

"Most kinds of equity release calculators online are free to use.  All you have to do is fill in some basic information about your individual circumstances, and you will be shown an instant quote."

How does an equity release calculator work?

An equity release calculator works by analysing the basic details you enter. It then conducts a search based on your personal information to see how much money you could access with equity release schemes from different providers.

After the calculator has worked out the maximum amount of money you may be eligible for, you will be given a standard estimate for the money you could get with equity release from property you own. Depending on the lender, this tax-free cash can take the form of either a lump sum or a regular income in retirement.

After the equity release calculator has shown you the maximum amount that people in your circumstances can usually borrow, you should be able to compare lifetime mortgages or home reversion plans from different companies.

You may want to search through the list because different plans have different features available to you. Some schemes will include extra protections such as Inheritance Protection, or the ability for you to transfer your deal to another house is you move.

equity release calculator online

Each additional feature you choose will increase the amount you need to spend on fees when you apply.

The online release equity calculator may also ask you questions about your contact details. By providing your email address or phone number,  you will be agreeing for advisers to get in touch with you and send you a personalised illustration and quote.

If you are considering the release of equity from your home, it is important to remember that it is a legal requirement for you to seek independent, professional financial advice before you apply. Equity release on property can impact how much tax you owe as well as your entitlement to means-tested state benefits.



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There are several key pros and cons to taking out an equity release product. This article examines the range of advantages and disadvantages associated with equity release. A worthwhile read if you are considering your options.

Lifetime mortgages are a popular type of equity release where you take out a loan secured against the value of your home. This type of scheme allows you to unlock money that is currently tied up in the value of your property.

equity release calculator

Most kinds of equity release calculator online are free to use.  All you have to do is fill in some basic information about your individual circumstances, and you will be shown an instant quote.

Home Reversion Plans

A home reversion plan is a scheme where you sell all or part of your home to a home reversion company in return for tax-free cash.  The money you release with a home reversion scheme can either be a cash lump sum or a regular income

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