Equity Release Calculator 

Equity release is becoming an increasingly popular source of additional income for people approaching retirement. Its promise of flexible, tax-free cash in the form of a lump sum or regular income is appealing for understandable reasons. 

But there are additional benefits – such as reliable funding for long-term care, reduction on inheritance tax and retaining ownership of your home. 

As equity release has gained momentum more products have been released – which is great news for consumers. But this does make the market more complicated to navigate for many. There are different kinds of equity release available, each with varying factors to consider. Additionally, each lender will have different features attached to the products they offer. 

It can be difficult to understand exactly how equity release works and how you might benefit from it. It can also be tricky to know whether you will be eligible. 

In this article we explain how equity release calculators work, and why using one could help you to decide whether equity release is right for you.  You can also read our article on ‘is equity release a good idea‘.

Topics you will find in this article

An audio recording of this article can be found at the bottom of this page and on Youtube. You can also listen to this article and many others on Apple Podcasts and Spotify.

"An equity release calculator allows you to effectively ‘try before you buy’ and plan ahead. It’s a great way to see how much capital you can (and should) release from your home. "

What is an equity release calculator and how does it work?

An equity release calculator allows you to effectively ‘try before you buy’ and plan ahead. It’s a great way to see how much capital you can (and should) release from your home. 

It works by considering your unique circumstances, analysing data such as your age, property value, any income such as pension or wages and funds such as savings and investments. 

Using this data it shows you firstly whether you are eligible for equity release, and secondly how much you can expect to borrow. Some calculators even include different scenarios based on the duration of the loan and interest rates. 

Our equity release calculator is free and easy to use. Unlike equity release calculators created by lenders, ours takes into account a general overview of the market. 

It is completely impartial and not endorsed by any particular lender. 

What is equity release and how does it work?

Equity release enables homeowners to access capital tied up in their property in the form of tax-free cash. Equity release schemes are effectively loans, secured against a percentage of the value of your property. 

Here is a short video on the pros and cons of equity release.

This is advantageous because you are using capital otherwise tied up in your property without having to move or downsize. Some equity release products, like lifetime mortgages, allow you to retain full ownership of your home rather than selling a share to the lender.

Equity release is also incredibly tax-efficient as the lump sum or monthly payments are no subject to tax. Where inheritance tax is a concern choosing equity release can help to lower or eliminate your liability altogether. 

What do I need to consider when thinking about equity release?

Equity release isn’t for everyone. It’s important to carefully consider the pros and cons before you plan on releasing equity. 

Am I eligible? 

In most cases you must be over 55 and own your own home. Any outstanding debt may also be considered. 

How much money do I need and what do I need it for? 

Consider how much money you will need, and what you will spend it on. Smaller amounts may not be suitable. 

Can I afford repayments? 

Equity release interest rates are notoriously high. Ensure that you can afford monthly repayments or consider the impact on inheritance should you decide to pay at the end of the plan. 

Will it adversely affect my financial situation? 

Some state benefits may be affected by a lifetime mortgage of the release of equity if they are means tested. 

Find out more about the pros and cons of equity release and different types of equity release here. 

What if I’m not sure after using the equity release calculator?

If you’ve tried using an equity release calculator online and are still unsure about whether it is a good option for you, there are other resources you can try. These include:

Speaking with a financial advisor

Professional financial advice is essential if you aren’t sure how to arrange your assets in order to make the most of your money. There is only so much information you can receive from a mortgage calculator – for a small fee it’s worth seeking specialist guidance to calculate and make plans for the future.

Considering other possibilities

There may be a more efficient way to borrow money depending on your circumstances. Other options such as bank loans and downsizing might be preferable. 

Consulting family and trusted friends

Before releasing equity in a house you might like to speak with family and friends to help you decide.  

Where can I find more information on equity release schemes?

For more information on equity release you can take a look at the FCA or Equity Release Council websites. 

Where appropriate speak with friends and family who have used equity release themselves. They may have some valuable first-hand insights and advice for you to help you with your plans. 

Be sure to only choose a provider that is authorised and regulated by the Financial Conduct Authority. Look for a negative equity guarantee to protect you against losing out should interest rates rise. 

You can also find plenty of useful articles and guides on later life finance, retirement and care funding here on the UK Care Guide website. For specific information on lifetime mortgages and equity release on property you can find specialist articles here. 

How can an equity release calculator help me?

Sometimes it can be confusing to understand how equity release might affect you – positively or negatively.

It’s incredibly important to determine whether equity release is a sensible and beneficial option for you. 

Everyone’s circumstances are different – equity release schemes can be excellent, but they are not for everyone. An equity release calculator can help you to decide based on your unique situation. It takes into account factors such as your age, income and property value. 

Some calculators are more detailed than others.  

You also want to be sure that you are getting a good deal – an equity release calculator can tell you how much you can expect to borrow and how much you might pay in interest. 

Listen to this article

Other informative articles on Equity Release

Equity Release Interest Rates

Equity release interest rates tend to be higher than rates associated with a standard bank loan. For this reason it is not for everyone. For example, equity release is most suited to people who need large sums of money.

Is Equity Release a Good Idea?

Releasing equity is one of the most popular ways to access cash in later life. As a result many people are asking: ‘is equity release good or bad’? The answer to this question is not straightforward and this article looks at this.

Paying for Care

The cost of care can be a stressful issue at a sensitive time. Funding care is an important consideration when planning your income in retirement and long term care. This article looks at the different options available.

What is a Home Reversion Plan?

A home reversion plan is a form of equity release scheme. Equity release schemes are a way of releasing some of the value of your property in exchange for cash. Lifetime mortgages are another type of equity release scheme.

Home Reversion Calculator

An equity release home reversion plan calculator gives you an idea of how much money you can get with home reversion. Typically, equity release may range between 20%-60% of the value of your property.

Home Reversion Companies

A mixture of companies such as insurance providers and retirement providers offer home reversion in the UK. There are far more lifetime mortgage providers than home reversion providers. 

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