Compare Equity Release Plans
Find Out How Much Cash You Could Release Today?
The above tool is a lifetime mortgage calculator, a resource for those researching equity release schemes to get an overview of what plans could get offered to them. The intuitive design of the calculator presents information on the maximum equity they could get and the prospective interest rates on their equity release.
Do you have any questions about how the equity release calculator works or the factors that drive results? You can learn everything you need to know about the tool below.
Let’s start by outlining the definition of a lifetime mortgage calculator.
Contents
- What is a Lifetime Mortgage Calculator?
- How Does a Lifetime Mortgage Calculator Work?
- Why Use an Equity Release Calculator?
- Understanding the Results of a Lifetime Mortgage Calculator
- How Much Equity Release Can I Take on a Lifetime Mortgage?
- Understanding the Types of Lifetime Mortgages
- What’s the Best Lifetime Mortgage Plan for Me?
What is a Lifetime Mortgage Calculator?
If you’re considering a lifetime mortgage, then a calculator can be helpful. It helps understand how much your interest charges will be and the monthly payments that compound the amount borrowed.
A lifetime mortgage calculator is an equity release tool that gives prospective borrowers an overview of the costs of unlocking home equity. It’s a simple yet effective resource that provides insight into what you can expect from taking out a lifetime mortgage, no matter the plan.
So how does a lifetime mortgage calculator work?
How Does a Lifetime Mortgage Calculator Work?
You’ll see from the equity release calculator presented above that there are a few sliders to adjust. Fix those to what best defines your current circumstances so that the calculator can work to provide a general overview of your equity release costs.
The information requested above includes:
- Selecting the age of the youngest homeowner
- Entering the value of your home (must be above £70,000)
- Choose a single or joint ownership of the plan.
- Select your property type
- Present your UK nation of residence (England, Scotland, Wales, Northern Ireland)
- Enter the value of your outstanding mortgage
So why is this information required to give an overview of your lifetime mortgage costs? It’s because these factors affect plans offered and their terms. We’ll go into a bit more detail below.
Why is This Information Required?
Here’s a brief outline of why specific information is on the lifetime mortgage calculator.
Age
Age affects how much equity you can release against your home. The standard procedure is that the older you become, the more equity you can take against your property. The calculator will base the amount on the youngest homeowner.
Home Value
Your home’s value is the core driving factor in how much equity you’ll be able to release on your property and the interest rates.
Single vs Joint
While many couples will apply for equity release under a joint ownership plan, there are instances where there will be single applications. The former schemes usually have different terms, sometimes offering less money, but could have lower interest rates.
However, single applications occur because the homeowner lives alone or their partner is under 55. Other scenarios may propel an applicant to file for a single plan, including property ownership in one name or the spouse’s primary residence is not the same as yours.
Residence Nation
Depending on where you live in the UK, different plans apply to prospective borrowers. Scotland, for example, has varying rules and regulations affecting the equity release schemes available to residents.
You can learn more about Equity Release in Scotland here.
Outstanding Mortgage
If you still have an outstanding mortgage balance, this will get taken from the available equity as an essential cost. That will leave the remaining amount of equity release you can spend as you please.
So why use a lifetime mortgage when there are experts that can help you understand your options?
Why Use an Equity Release Calculator?
We compare plans from the leading equity release providers
A lifetime mortgage calculator can often be a practical tool to understand the costs of the equity release scheme almost instantly, without needing personal information, and to arm yourself with more knowledge about your potential plans. The typical reasons prospective borrowers use lifetime mortgage calculators when researching equity release are:
- Results are instantly displayed on your screen.
- Anyone can use them
- The information is not invasive.
- No data from the calculator gets stored or used
Therefore, lifetime mortgage calculators can quickly give prospective borrowers an excellent initial insight into their equity release options. However, should you seriously consider a plan, speak with an expert to better understand lifetime mortgage plans.
So by now, you may have input your information into the calculator, but what do the results mean?
Understanding the Results of a Lifetime Mortgage Calculator
As soon as you strike that calculate button, you’ll see a series of numbers on your screen. Those figures detail your loan balance and interest charged monthly to understand how much your repayments will be over time.
You’ll get presented with how much equity you can take on a ‘maximum release plan’ and what kind of interest rate you’ll get charged. Interest is one of the key figures presented here, but many get left wondering why that rate applies.
Let’s deduce how interest rates get calculated for lifetime mortgages.
How Does the Interest Rate Get Calculated?
Many factors can affect the interest rates in your choice of plan, some of which may not get accounted for in the equity release calculator. However, you can get a reasonably accurate figure by presenting core information surrounding your scenario.
Lifetime mortgage interest rates tend to range from 4% to 7% on average. The factors that determine the rate available include:
- Loan-to-Value (LTV) – Amount you borrow against your property value.
- Property’s Location – Residences outside England, Wales, and Mainland Scotland may not be as competitive.
- Construction – If the property build is unusual, you’ll get a higher interest rate than standard construction.
- Property Type – Houses and bungalows tend to get more competitive rates than flats or maisonettes.
One of the more factors in focus is the LTV ratio, where the amount you borrow impacts the interest rate offered. Let’s understand more about how the equity release taken affects interest.
Why Does the Loan-to-Value (LTV) Affect the Interest Rate?
Currently, most lenders will offer the lowest interest rates (around 4%) for plans with less money taken, with higher interest (about 7%) for those with a high LTV. This factor is typical because those older applicants can release more equity on their property, up to 60% LTV in some cases.
As there’s an expectation they won’t live as long, interest rates will be higher following the lending risks involved in a lifetime mortgage plan.
So let’s jump to it and get an idea of what results will appear using the lifetime mortgage calculator.
Example of How Much Interest Gets Charged Over Time
While there are different types of lifetime mortgages, the most common plan is the standard with rolled-up interest. The tables below express a compounding interest lifetime mortgage with your accrued balance, should you get approved for an equity release of £50,000.
Here’s what your outstanding balance would look like with a 4% interest rate.
| Year | Loan | Interest at 4% | Total Owed |
| 1 | £50,000 | £2,000 | £52,000 |
| 2 | £52,000 | £2,080 | £54,080 |
| 3 | £54,080 | £2,163 | £56,243 |
| 4 | £56,243 | £2,250 | £58,493 |
| 5 | £58,493 | £2,340 | £60,833 |
| 10 | £71,166 | £2,847 | £74,013 |
| 15 | £89,830 | £3,593 | £93,423 |
And let’s have a look into a 5% interest rate.
| Year | Loan | Interest at 5% | Total Owed |
| 1 | £50,000 | £2,500 | £52,500 |
| 2 | £52,500 | £2,625 | £55,125 |
| 3 | £55,125 | £2,756 | £57,881 |
| 4 | £57,881 | £2,894 | £60,775 |
| 5 | £60,775 | £3,039 | £63,814 |
| 10 | £77,640 | £3,882 | £81,522 |
| 15 | £99,091 | £4,955 | £104,046 |
And finally, what would the amount owed look like at a 6% interest rate?
| Year | Loan | Interest at 6% | Total Owed |
| 1 | £50,000 | £3,000 | £53,000 |
| 2 | £53,000 | £3,180 | £56,180 |
| 3 | £56,180 | £3,371 | £59,551 |
| 4 | £59,551 | £3,573 | £63,124 |
| 5 | £63,124 | £3,787 | £66,911 |
| 10 | £84,475 | £5,069 | £89,544 |
| 15 | £113,048 | £6,783 | £119,831 |
As you can see, the final outstanding balance can accrue significantly. It gets repaid from your home’s sale after you pass away or move into long-term care. Some options, such as drawdown or interest-only lifetime mortgages, can minimise the final balance owed.
These plans are not in the lifetime mortgage calculator due to a large number of variations in the way they work. Speak to an equity release expert if you want a clearer picture of these options.
So with an understanding of what your balance will look like from processing the lifetime mortgage calculator, the other critical result is how much you’ll be able to take out from the plan. We’ll present an outlook below.
How Much Equity Release Can I Take on a Lifetime Mortgage?
How much equity release you can take largely depends on how old you are and the property’s value. Below, the table demonstrates how much equity release in an LTV percentage you can take based on age.
The LTV value is the percentage of your home’s value you can unlock as an equity release.
| Age of Youngest Homeowner | Max Equity Release on Standard Terms | Max Equity Release on Enhanced Terms* |
| 55 | 33.2% | 43.6% |
| 60 | 39.2% | 49.5% |
| 65 | 44.3% | 54.4% |
| 70 | 49.5% | 54.5% |
| 75 | 54.5% | 56.4% |
| 80 | 59.6% | 57.1% |
| 85 | 60.7% | 57.9% |
| 90 | 59.3% | 57.9% |
*Enhanced terms may apply to those with medical needs, where applicants could get a higher LTV and lower interest rate. You can read more about enhanced lifetime mortgages here.
So let’s make sense of these figures by putting specific age groups into lifetime mortgage scenarios.
Example Scenarios of Lifetime Mortgages
Below you’ll find examples of lifetime mortgage scenarios, applying for equity release with a £300,000 home. How much could they get on standard terms? The calculator would generate these results.
- Age 55 – (£300,000 x 33.2% LTV) = £99,600 maximum equity release.
- Age 60 – (£300,000 x 39.2% LTV) = £117,600 maximum equity release.
- Age 70 – (£300,000 x 49.5% LTV) = £148,500 maximum equity release.
- Age 80 – (£300,000 x 59.6% LTV) = £178,800 maximum equity release.
- Age 90 – (£300,000 x 59.3% LTV) = £177,840 maximum equity release.
As shown above, the terms would vary for those on approved enhanced terms. Equity release specialists could give a more personalised illustration of your plan if you were on an enhanced lifetime mortgage.
Understanding the Types of Lifetime Mortgages
We’ve mentioned that more than one type of lifetime mortgage could better suit your needs or financial circumstances. Below we’ve listed a general definition of the most prominent types of this equity release scheme.
Standard Lifetime Mortgage
Our equity release calculator gets based on the standard lifetime mortgage as the leading type of equity release plan. The scheme allows homeowners to unlock cash against their home, with interest accruing monthly on top of their outstanding debt.
There are no repayments until after the last homeowner passes away when the outstanding balance gets settled from the sale of your home. The remaining debt will never be more than your home’s value, and the cash lump sum received is tax-free and can get spent as you please.
Interest-Only Lifetime Mortgage
Interest-only plans allow borrowers to make repayments only on the amount borrowed and not compounding. These plans are usually under a fixed term, where homeowners agree to make monthly payments on the interest accrued on the original balance.
After the contract expires, the outstanding balance gets rolled onto another deal or repaid. This plan avoids a large amount of interest compounding and minimises early repayment charges but requires regular payments.
Drawdown Lifetime Mortgage
Drawdown lifetime mortgages offer the borrower an initial lump sum of cash from their unlocked equity, with the rest going into reserve. They will get charged interest only on that first balance and any amount they take from the drawdown facility after that.
You can read more about drawdown lifetime mortgages here.
What’s the Best Lifetime Mortgage Plan for Me?
The core aim of the instant equity release calculator is to provide an overview of the best plans you can get considering your circumstances. However, as helpful as the calculator can be, you should always seek information from an equity release specialist to elaborate on your results.
After processing the results, the calculator presents an option to connect you to an appropriate broker. You can ask them any questions about the figures shown and a more personalised outlook for a prospective equity release product.