AZMoney - Compare Financial Products

Equity Release Calculator

Use equity release calculator to get an indication of the amount of money you could get borrow via an equity release plan.

Approx. amount available via equity release
Minus any outstanding mortgage or loan
Potential Cash Available:
* Equity release is only available if the youngest homeowner is 55 or over. The best option for those under 55 is a remortgage.
Age of the youngest homeowner *:
  yrs
Property value:
£
Outstanding Mortgage Balance (inc. any secured loans):
£

What is equity release?

Equity release is an option for elder people to gain a regular income or a lump sum of money usually by selling the rights to own the person's property. However, after the person uses equity release option he can live in his house as long as he wants (usually until he dies). The main condition is that when an individual dies the rights to the house will belong to the one who provided a regular income or a lump sum of cash for that person. Only the people over 55 are eligible to use equity release though usually only people who are over 60 can do that. Though it is always wise to consider other options, equity release is considered as a good choice for those who do not have heirs to leave their property to after an individual dies.

Things to notice

It is important to notice that equity release calculator should be used for calculations what could be expected as conditions can differ from case to case. First of all, sometimes only people over 60 and not 55 can use equity release option. However, if the person who is between 55 and 60 decides to use equity release it is most likely that he can find offers to do that.

Furthermore, this calculator grasps three inputs. Even though it is enough to calculate approximate values and what amount of money via equity release could be expected to be raised, the person who uses this financing option is likely to get an individual offer which will probably depend from various factors such as his health condition, age, whether he lives alone or not and other important facts about his life. All these details are important for the one who provides a regular income or a lump sum because the sooner he can get the property the more he is willing to pay for the rights of that property. However, no calculator can include all the possible variables and as this equity release calculator grasps all main inputs it can be a very useful tool to calculate how much money the person can get.

Using equity release calculator

This calculator has three inputs: age of the youngest homeowner, property value and outstanding mortgage balance (including secured loans). Though it may be discussed whether only three factors are enough to be used for accurate calculations, there is no doubt that the main factors which are the age of the person and the property's value are inserted into the calculations.

Age of the person

The older the person is the more he can get via equity release as his life expectancy becomes lower. Moreover, this amount of money is directly linked to some percentage value of the property. This percentage amount depends from the age of an individual. In this calculator the person who is 55 can get 22% of his property value as a regular income or a lump sum of cash. This amount of money increases each year by 1%.

In other words, the person who is 56 can get 23% of his property value, the one who is 59 can get 26% and so on. However, such increase in this calculator happens only after the person is 65 years old. There is a high increase of 8% compared when the person is 64 and when he is 65. After that the increase gets slightly bigger when it was when the person was between 55 and 64 and until the 70th birthday it is equal to 1.5% each year. So the person who is 70 years old can get an income which is equal to 46.5% of his property value.

After the person turns 70, the increase in the amount of money that can borrowed differs by each year and is not steady, however it is usually 1%, 1.5% or 2%. For example, if the person is 75 he can borrow 54% of his property value, if he is 80 he has possibility to get 60.5% of his property value and if the person reaches 85 he can receive 66% of his property value.

Let's take an example where the person has the property worth £200,000. The person who is 55 years old because of his higher life expectancy can borrow only £44,000 via equity release. If he is 64 he could borrow £18,000 more or £62,000 in total. However, when the person turns 65 he can borrow 8% more or £78,000. Finally, the maximum amount of money can be borrowed when the person turns 85. In such case he could get £132,000.

Outstanding mortgage balance

If the person has mortgage or any secured loans, he is going to get less amount of money as this factor decreases the value of property. This decrease is very straightforward. If the person has £10,000 of debt because of mortgage or secured loans, he is going to get £10,000 less. Thus, if the person is 55 years old, has property worth of £200,000 and has £15,000 of mortgage left, he will get via equity release income equal to £200,000 * 0,22 - £15,000 = £44,000 - £15,000 = £29,000.