Author Archives: Martin Channon

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Any starting point in equity release research needs to be assessing whether your goals can be accomplished. An equity release calculator will net your results to provide an overall maximum release. Whether this is for the more popular roll-up lifetime mortgage, or interest only lifetime mortgage, the answer to these are essential to prevent wasting your time trying to realise an impossible dream.The EquityReleaseCalculator.net website provide a suite of calculator tools & information appertaining to releasing equity from your main residence. By establishing the maximum equity release possible, enables you to continue further your research into finding which equity release schemes meet your requirements.

Compare the Best Equity Release Calculators to Find the Road to Financial Freedom

You want to be finally set for your retirement years. Most people do. Sometimes the best laid plans do not work out. For example you might have a retirement fund, but it got hit severely with stock market issues. You may have needed to use some funds to help out your children or grandchildren. The point is you are here because you want to have financial freedom and hope that the best equity release calculators can help you. Yet, you might be hesitant to even use the calculators online when you see what they ask for. Find out how to differentiate the best calculators from those that are data mining.

Does the Website Look Professional?
Some websites look more professional than others even when dealing with equity release calculators. There are several ways you can tell whether the website is actually a decent information site and worthy of your attention. The first thing you want to do is look at the ‘About Us’ page. If the page offers an exact date for when the website was launched, plus a decent history of the company or people running the site you can trust they are professional. Take a look at their blog, news, or article area to see what types of information they provide to you. Is the writing on the site professional or filled with grammatical errors one after another? Do you learn something from the content of the site or is it just marketing? A professional site will have more than looks it will have depth in all areas as well as provide you the data you want to know from the calculator.

Are Equity Release Websites Just Acquiring Your Data?
A part of determine whether a website is worthy of your information for calculating potential equity release amounts is the data and information you are asked for. For example, say you pull up a website and all it has on the home page is the calculator asking for your name, phone, email, address, sex, age, and property value. There is also a field to fill out with contact information to log-in or sign-up, but there is no information given to you about how the calculator works or what it will provide. This type of site is just asking for your data and not giving you information in return. An equity release calculator should work both ways – provide the calculation you require to establish the maximum release of equity and for the equity release broker to have a chance to discuss the potential of doing your business with one of their equity release advisers.

Are Mandatory Fields Relevant to the Information you Want?
You want certain information. In fact you want to know if you can afford to take out equity from your home, whether it is in the form of a lifetime mortgage or home reversion. You ultimately want to get results from the data you input. This goes along with separating data mining sites out from the information sites. If the mandatory fields as just about your name, email, and telephone and not about your age, health, and property value the site is just trying to get your information. Another consideration is if you fill out the mandatory information with fake data do you still get results from the calculator. This is a great way to test the site.

Some sites are extremely smart and know when you have not entered a proper name, email, or telephone number. For instance if you put xxxxxx xxxxx for your first and last name plus xxxxx@xxxx.com and 010000000 for the telephone number and you receive results they are not data mining, but trying to give accurate estimates of your lifetime mortgage options. If the site says you have not provided correct data in the mandatory fields and withhold the calculation result it is a data mining site.

Is the Website just Marketing Equity Releases?
When a website is just trying to market to you it means they are data mining. They are trying to get your information so they can market to you and what your interests are rather than supply you with relevant accurate details. Always check their privacy policy and T&C’s to see if this is genuinely allowed.

A good website is going to work for your and the other side. Each party will provide information that is helpful to the other person. For the website they get marketing details and learn what you are most interested in as a means of sending you information based on your needs. You get the data results you wanted to see, in other words the calculation of loan to value the company or companies are willing to provide you with for equity. Since you made an enquiry the website can then make their enquiry and help answer any questions you might have about the results.

The Results
The equity release results you receive from the equity release calculator can help you find the solution you are looking for with regards to your financial needs. You know what you hope to gain from an equity release mortgage or at least you have a basic idea. You want enough funds to live your life comfortably. You know whether there are health issues that may require you to sell your home and seek assisted living. You understand what your current retirement funding offers and if you wish to provide your children and grandchildren with their inheritance while you are still alive.

The results can tell you what is possible. It will not tell you how you can use it or give you a “set in stone” loan to value result. This is an important distinction when talking about calculators. You cannot believe that the results you receive are wholly accurate and will not change. A lot of factors can affect the results you received from the calculator. You use the results to your advantage & gain a sense of perspective as to how much you can look forward to achieving in your retirement.

For instance, if you ball-parked the property value based on current home sales found on Zoopla you could be out by £50,000 either over or under valuing your property. This means the estimate of available funds will also be over or under the actual amount a company can truly provide you. This is where finding a professional website with helpful advisers can come in handy, particularly when you are ready to talk numbers and potential lifetime mortgages.

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Is an Enhanced Equity Release Calculator Available Yet?

Enhanced equity release calculator tools are available online. These calculators are specific to the enhanced, impaired, or ill health lifetime mortgage schemes on the market rather than home reversion or other lifetime mortgage products. Given the specific nature of these mortgages, the calculator has to take into account more information than the standard lifetime mortgage.

History of Enhanced Equity Release Plans
A decade ago enhanced equity release plans were on the market through Hodge Lifetime and Partnership Assurance. They provided enhanced options through home reversion plans. However, with changes made by the then Financial Services Authority, now the Financial Conduct Authority, the plans were discontinued, leaving the market without any enhanced home reversion or lifetime mortgage schemes.

In more recent years, new lenders have joined the market offering enhanced lifetime mortgage plans. Partnership re-entered followed by new companies like More2Life, Aviva, and Just Retirement. By new we mean new to the enhanced equity release plan, and not necessarily to the market as a whole.

Following the principles of enhanced annuity, enhanced or impaired equity release schemes use health as a way to provide the maximum equity release amount, which is where the enhanced equity release calculator comes in. Be aware that the more severe the illness is the greater the maximum equity amount will be.

Lenders Supplying Tools
Some brokerages and websites have developed the enhanced equity release calculator to help supply the maximum lump sum an individual may be able to take out of their home. Unfortunately, accuracy is difficult to predict due to the myriad questions on the health and lifestyle questionnaire which determines a person’s life expectancy. This questionnaire is coupled with a mortality indices table based on age and illness to give an applicable value.

This means the calculator is designed to give you the maximum amount based on the worst case scenario. You may or may not be a person in the worst case scenario, but that is the result you will get, therefore, you need to speak with a broker before deciding if this loan is truly right for you.

What can Brokers Do?
An independent financial broker specialising in equity release schemes should be contacted once you have a beginning figure for an enhanced equity release product. The adviser will take the enquiry beyond the standard calculator questions to see if there are any other factors that could release the maximum lump sum or if you will only be able to get a smaller amount. The enquiry is based on a Key Facts Illustration (quote) from relevant providers in the market.

A broker is able to discuss your situation with financial companies lending the money for lifetime mortgages. They can discuss whether there are other factors that might release more or see what current products are available to you.

You should be aware that even if something is advertised on TV, the Internet, radio, or through a calculator calculation, you may not be able to get that same product. This is where the broker comes in. They have resources you do not have available.

Why Use the Calculator
You are probably asking why you should use the calculator at all if you still have to speak with a broker. The main reason to use it is to see the potential maximum lump sum. If the maximum lump sum is not anywhere close to the funds you hope to unlock, it gives you an idea of whether lifetime mortgages and other equity release products are right for you.

Additionally, it tells you whether your ill health is a qualifying factor to release more equity than a standard lump sum. It might be a guide number that results, but it does prove whether going on to the next step and speaking with a broker is worth your time.

While the value might change to a lower one, the original calculation result gives you enough of an answer to get started. There are also times when the calculator is not giving you a high enough number because you have multiple health factors. If you can find a maximum lump sum that works for you based on what you input into a calculator and a broker can get more released it might work out better for you. Of course, as you use the enhanced equity release calculator, you do need to remember it is only an estimate. You always want to speak with a qualified professional who is independent to ensure you are getting the very best product for you.

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What Results does an Online Equity Release Calculator Show?

An online equity release calculator is pretty smart now that we have a good number of technology and website designers willing to provide you with as much information as you can get all from one site. You can get up to four results using an equity release calculator. Some websites may offer only one; another might offer lifetime mortgage standards versus home reversion; while the last one you visit offers up to three. The results you may receive will be explained, but first be wary.

Most websites are trying to get your information. They want to look at the results for marketing purposes, as well as to get you on the phone or via email to sell you their product, versus one of the other company’s on the market. You will want to be careful who you give your information to. Make certain you trust the website and avoid any that say they will show you the results in the next step. In reality, all the calculator needs to know is your age and your home value.

Home Reversion Determiners
Home reversion is a sale of a home you own. It has to be your primary home or at least the home you use as your main residence. You must be 65 years of age. You cannot have a mortgage outstanding on the home or some companies will allow you to use the home reversion funds you receive to pay it off.

The idea is that you live rent free under a lifetime tenancy agreement in your home until death. If you need to leave the home, you will sell the remaining part and you cannot move back in. The home is sold in full to the buyer, a home reversion company. This company offers you a percentage for the home based on the full value of the home, less the percentage they consider as their investment. You never receive full value for the home whether you sell in part or full. The idea is that the money you are given, less the full value, is the investment the company gains from you plus any appreciation that occurs while you are living in the home. If the house is not sold in full and it appreciates you benefit too.

So the older you are, the higher the percentage you gain in funds on the premise that the investment will not be outstanding for as long. There is no interest involved.

Lifetime Mortgage Determiners
For an online equity release calculator offering lifetime mortgage results, there are differences from a home reversion calculator including the fact that you are now dealing with interest. It is not a percentage of the home you decide to sell, but a percentage you can gain in return for making a capital lump sum payment, plus interest at your death or when you decide to sell and move out of the house.

If you are in perfect health, you will want to use the standard ER model as this shows you what a healthy adult, at your age, with your home value, can get as a maximum capital sum.

A person that is in ill health is expected to die earlier than most, which means they will pay back the loan quicker and thus the investment is not outstanding for as long. With interest accrual to factor in and a company wanting to make as much as possible, they are willing to increase the lump sum awarded due to your lower life expectancy.

The third type of result is with an interest only mortgage. This is provided to borrowers who have money to make a monthly payment. The payment is only the interest accruing in a month based on an APR. It keeps the capital lump sum the same throughout the loan. Again, age and home value factor in. With an interest only loan there is concern over the individual being able to keep paying on the mortgage, so usually the amount is lower. It leaves the option of converting to a standard lump sum product open for the future.

Do Your Research and Get Armed with Information
There is nothing better than being armed with information when you go to speak with an independent broker regarding possible products and actual maximum amounts available to you. Always remember the online equity release calculator provides an estimate to use as a guide. It simply states whether it is possible to get a loan at affordable terms for your retirement, versus something that is not feasible.

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Which Equity Release Company offers Maximum Equity Release from your Home?

Retirement is a difficult time in the current economic situation due to inflation, the ending of the recession, and lower wages. While the economy is repairing itself, many families in retirement or about to retire do not have enough savings to last until death. There is a solution in retirement products including equity release. To gain the maximum equity release from your home there are a few factors that will matter: property value and age of homeowners.

Examining the Factors
Your property’s value determines what you have available in equity. Equity is usually defined as the total value of your home minus any existing loans. Therefore, if you have no loan and the value is £300,000, you have £300,000 in equity.

No mortgage company is going to offer 100% loan to value. They will offer a percentage of the loan to value based on the type of equity release you choose. A standard equity loan has monthly repayments with interest. A lifetime mortgage equity release scheme holds the repayment until the end, including interest you may owe. The interest compounds onto the back of the loan, so in 10 to 12 years, the initial lump sum you received for the loan could double. If you take out £100,000 then it could become £200,000 in 10 or 12 years.

The next part of this retirement product is age. A qualification of most companies offering lifetime mortgages requires any borrower to be 55 years of age at least. There are a few companies requiring an age of 65. In the case of dual ownership, with a spouse or civil partner, the lender will look at the age of the youngest borrower to determine the amount of the loan and if you qualify at all. The idea is the youngest borrower will live longer and will compound interest longer; therefore, the total loan amount needs to reflect the time the loan is outstanding and gaining interest.

Specialist Equity Release Companies
There are companies which target this niche market as a way to provide the maximum equity release to you. Aviva Lump Sum Max, Pure Retirement, and Just Retirement are three such companies offering the maximum amount possible. Aviva’s Lump Sum Max is currently at 5.63% with a fixed interest rate. Pure Retirement offers a product at a fixed base rate of 6.55%. Just Retirement is higher at a fixed interest rate of 6.75%. Aviva and Pure Retirement are two companies offering an incentive for retirees to sign up.

It is up to you, the borrower, to determine which product is best for you and your family. Each company has specific details, which tend to target consumers specifically. One company may not be best for all ages i.e. they may be better for older individuals, versus those just entering retirement.

Independent Advice and Due Diligence
Given the different products on the market, it is up to you to conduct due diligence by finding an independent adviser who can help you research the market and provide you with an equity calculator UK. By using a calculator it is possible to determine the maximum amount available to you. Remember, this is just to give you an idea of potential options. The company still has a say in whether they lend the maximum amount based on your qualifications. An equity release broker is ultimately going to determine the maximum release they will provide.

Also, there is a potential that your ill health could help you receive a larger than typical maximum. If you suffer from an illness, there is a product that provides an increase over the standard terms allowable to most retirees. Companies use theory of mortality tables to determine if someone will potentially die earlier than the average person, thus some of the newer schemes take this into account and will revise the maximum they are willing to offer you.

Aviva, Just Retirement, More2Life and Partnership provide variable levels of enhancement to offer you the maximum equity release possible if you have ill health. By checking with an independent adviser you can conduct research, examine their information, and determine what might be best for you and your family.

Even if you do not have ill health it is possible to get the maximum allowable for your age in a standard product. There are disadvantages with this product. Be aware of these negatives before signing a contract. It is another area your independent adviser can help you with. As always, when looking at financial products, start out with research, calculating possibilities, and then find a product that suits you rather than the lender.

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Which is the Best Equity Release Plan?

When it comes to deciding which is the best equity release plan that is suitable, it can be difficult without the required knowledge. It is always best to seek independent financial advice to find out which plan is the best for you. When choosing a plan, consider if you are looking for a low interest rate, the ability to make partial repayments, a guaranteed inheritance for your children, or just the maximum lump sum.

One Company Offering Comparisons
Equity Release Supermarket is an online company that will show you which equity release plans to choose from. They provide a comparison table of plans and products that will help make your search easier. The plans include drawdown, home reversion, lump sum, and interest only mortgages. In addition, they can provide an advisory service and have the facility to provide an appointment with a local adviser, either in the comfort of your own home or over the telephone, dependent upon which ever suits your requirements best.

Exploring Details of Lifetime Mortgages and Home Reversion
A drawdown equity release is similar to a lump sum lifetime mortgage, except that you only need to take only the amount of money that you will need. That way you do not eliminate all of the equity in your home at one time. A lifetime mortgage allows you to receive the maximum amount that your home is worth at one time. A home reversion allows you to borrow any amount from the equity of your home by selling a proportion of the house value. For instance, by borrowing half you will allow your children to inherit a piece of the property when you pass away.

An Alternative Lifetime Mortgage
The only equity release plan that you will need to make monthly payments while living in the home is an interest only lifetime mortgage. This type of plan is good to get if you want your children to have as much equity as possible when you pass away. One of the few companies to offer such a product is Stonehaven, who restrict borrowers to a minimum age of 55. Most other interest only lifetime mortgage lenders such as Halifax, who operated their Halifax Retirement Home Plan, have now withdrawn from the market.

How Equity Release Works In Principle
With most of the equity release plans you do not need to make monthly payments. In fact, you can live in your home for free until you pass away or go into a nursing home. The interest that accumulates on the loan for the remainder of its term and will eventually be repaid once you pass away or go in a nursing home.

You decide which product is correct for you, whether you want to make a monthly interest payment or no payment at all. The benefit is that you get the money you require now to make your retirement easier. The disadvantage is the amount of inheritance you can leave behind. This is why you should be aware of how lifetime mortgages and home reversions work.

First of all the money is tax free and can be used at your discretion for home improvements, repairs, or even holidays. Under home reversion you have already sold a portion of your home so you have less worry of paying something back and a lifetime tenancy agreement. For many this is uncomfortable, but it affords that inheritance as mentioned. You also have to be 65 to start this process, whereas lifetime mortgages can start from as early as 55.

Speaking with Family
An independent financial adviser is great, but you also need to be wary about what your family will think. As it is their inheritance and they may be able to help you keep the home in the family, it is important to get their opinion. They may see something you missed or simply help you sign a better contract.

For example, with lifetime mortgages there is a clause called a ‘no negative equity guarantee’ agreement in which the company cannot try to obtain any more than the house is worth upon your death or decision to sell. It protects you if the house loses value.

A homeowner may have an idea on which equity release plan they want, but it is still best to contact an independent financial adviser, to make sure you are making the right choice. One plan may be better for you than the others. The independent adviser will ask you a series of questions to help you choose the best plan. So, if you have any questions, ringing Equity Release Supermarket on 0800 678 5159 maybe your best option.

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London Calling for Equity Release Pensioners to Cash in on Booming Housing Prices

Year to year, month to month, the housing sector changes which is good news for London property owners. It has been a buyer’s market in recent years as a consequence of the recession and housing prices falling due to the subprime mortgage issue. Now all of that is in the past and there is nowhere to go but up for many of the Capital housing values. If the 11 per cent price increase from 2013 to 2014 is any indication now is the time to take advantage of London equity release products such as lifetime mortgages and home reversion plans. Before getting to how a lifetime mortgage calculator can help determine if this is the right option, take a look at what the product can help you with.

Lifetime Mortgages Aim to Release Tax Free Cash
In a time where housing prices are increasing each month, there is no reason not to take advantage of financial products that can offer tax free cash in a lump sum. Across the UK prices have increased by 3.3 per cent just looking at the month to month figures. Many websites are reporting an 18 per cent increase from 2013 to 2014 in the London area when comparing last April with the most recent April. For individuals over 55 this means your house in London might be worth as much as 18 per cent more in value than it was last April 2013. From last month you might have 3.3 per cent more value in your home.

All this comes down to the total value of your home and the amount you would be able to release in equity. Consider if your home was worth £200,000 last year and it has increased to £225,000. On a sale you would have £25,000 extra equity. With a lifetime mortgage product you have an increased percentage of this equity that you can withdraw.

When you use a lifetime mortgage, you have the option of taking out a loan that does not require any repayment until you move out to a long term care location, a new property, or you die, hence the “lifetime” descriptive word. Equity is based on the value of your property, so if you have no loan then the total value of your property is what is available in equity.

With lifetime mortgages you can take a percentage which can never end up more than 100 per cent of the property value, at the end of the loan. In other words, when you use a lifetime mortgage calculator, & calculate on a roll-up basis, the principle loan amount plus the compounding interest over the life of the loan can never be more than the final value of the property. This guarantee is provided by all London equity release providers by way of a mandatory option, called the ‘no negative equity guarantee’.

The cash you take out is yours to do with what you wish and without tax consequences. It is simply swapping property for cash through a loan, which is why it avoids capital gains tax. Additionally, by working smart, if any means tested benefits are received schemes such as the drawdown lifetime mortgage plan can be used as a work around. By keeping savings levels under the £10,000 limit, no detriment will be afforded to means tested state benefits by taking smaller & regular chucks from the cash reserve facility.

Methods of Using Equity
The prime reasons Londoners over 55 are keen to take out lifetime mortgages, and you might wish to consider it, is how you can use the money. The money can be used anyway you wish, but more importantly it can be used to increase your home value exponentially.

Home improvements such as for a new roof, extending the home; upgrading the appliances, kitchen countertops, and making it more energy efficient are just some ways to increase your housing value. The more renovations you do towards making your home desirable for the next several years, the more it will continue to increase in value. There are certain home improvements that will matter very little to the value, so be aware of what truly increases the property and consider taking advantage of London equity releases.

Another top reason to take out a home equity release mortgage like the lifetime loan is children. Children and grandchildren more often than not, need financial help. Perhaps it is about paying for university for your son or daughter. Maybe your child needs to buy a house, but lacks a down payment. Whether you invest in a second home or help invest in your children’s educational future, it is an investment you can reap benefits from. A simple London equity release mortgage can solve many financial problems, but always seek professional equity release advice.

Advantages of Lifetime Loans
Not only do you get to use the money as you wish, but you can also increase the value in your home if you desire. The money is going to be tax free even if you decide to give a little gift to your children. As long as you keep your “gift” under a certain amount there is no capital gains tax or inheritance tax after seven years for them. You get to help them out and they get a little inheritance to enjoy while you are still alive.

Use a lifetime mortgage calculator to determine what you could release from your London property and start making plans today to enhance your retirement living standards.

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Invest Time Finding an Equity Release Calculator to Determine the Maximum Release

When people have reached their retirement age, despite careful retirement planning, they may find that their income is not sufficient for their desired lifestyle or to cover plans for long term care. The prospect of costly long term care can be a worry for many retired people and few will have the level of income or savings to cover this eventuality. Equity release schemes can offer a potential solution for this dilemma and provide a lump sum, which can be used for any reason. However, many people are hesitant about consulting professional advice without knowing what is the maximum equity release sum available.

Find an Equity Release Calculator

If you have considered equity release, it can be worth investing the time to find an equity release calculator. This will help to determine the maximum release possible, which can allow you to explore whether this option would provide sufficient finance for your needs. The calculator will collate your details including your age, property value and current mortgage balance to provide an illustration of the schemes which could be best suited to your requirements.

Tailored Examples

A great number of calculators assist not only with what is the maximum equity release available, but can also provide tailored examples of the way in which you could choose to receive the funds. For people aged fifty-five and over, equity release provides a tax free sum. However, many schemes offer flexibility about whether you receive the funds in one lump sum or as flexible monthly payments. This can assist you in your retirement planning, and assist you in ensuring that you have not compromised your qualification for other forms of financial assistance that might be available to you. Since the equity release schemes are designed to run as a lifetime mortgage, this means that the loan balance only becomes due for repayment on death or if you move into long term car. At this time, the home is sold with the balance of loan being settled and any remaining funds are passed on to your beneficiaries.

Why Calculators Are Helpful

The equity release industry has flourished over the last few years, with new providers and household names now offering some great deals and schemes. However, it can be difficult to explore your available options and by calculating what is the maximum equity release, home owners can adequately make plans. These online tools can help to establish the limitations of equity release and provide figures to assist the decision making of whether or not to proceed. There are a number of online companies such as CompareEquityRelease.com, which offer different calculators showing the figures involved in conventional roll up plans and lifetime mortgages which are interest only. This enables a comparison to be made and helps in determining which schemes may be better suited to your needs.

Comparing equity release schemes can be challenging, but by finding a good online calculator, it can help you to make comparisons with just the click of a button. There are many independent companies, which offer calculators with access to the entire equity release market without any bias towards certain providers or products. This can help you to find the best possible deal and obtain real time figures to help you in your long term planning.

Help Taking the Next Step

Online tools such as equity release calculators can provide great help in taking the next step. Once you have determined what is the maximum equity release possible for your circumstances, you can then make an informed decision about whether you would like to proceed further. For many people, obtaining this figure can instantly provide information about whether equity release is feasible and optimal for their individual needs. This can save a great amount of time for those who would not qualify and enable those looking to apply, a clarification of the scope and possibilities offered.

Deciding to proceed with equity release can be a huge decision and the anonymity of online calculators allows home owners to explore their options without committing to an appointment with a broker. This can provide assurance that they are making the right decision and supply figures which can be used in discussions with their families. Equity release schemes can provide an excellent financial solution for a great number of retired people. However, it is a new financial commitment and it is important to understand what is the maximum equity release available for your circumstances in order to make informed choices. If you have considered equity release, it can be worth taking the time to find a good equity release calculator to determine your options and the size of release which could be available for you.

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The Purpose of Equity Release Calculators

If you are in your retirement period, own your own property and are in need of an additional source of income, an equity release plan might be the solution that you are looking for. Equity release allows you to release money that you have invested in your property. The advantage of equity release is that you do not need to make any monthly repayment.

The money that is received from an equity release plan is tax-free and can be used for any purpose. By now, you might be wondering how much money it is possible to borrow from an equity release provider. The fastest way for you to find this out is through the use of equity release calculators. Equity release calculators help you to calculate the total amount of money that you can borrow.

Although equity release calculators are free and can be very helpful in the equity release process, you are not obligated to use them. It is however recommended for you to use them because they will give you a general idea of how much money you can borrow based on a number of factors. These factors include: the total amount of the property, the age of the borrow, the health of the borrower, and any outstanding mortgage or loan. If you are applying for a London equity release scheme with your partner, equity release calculators will work with age of the youngest applicant.

Equity release calculators can be found on almost all web-based equity release sites. One of the most popular web-based equity release sites is www.compareequityrelease.com. This website as well as many other website offers three different equity release calculators. One calculator is meant for healthy applicants who are interested in an equity release plan based on roll-up interest. One calculator is used for applicants who have poor health and have had a history of bad health. One calculator is used for applicants interested in an interest only lifetime mortgage plan.

Although the maximum amount that you can borrow is calculated by equity release calculators, it is not advisable to borrow the full amount. Equity release calculators are not meant to be used as the deciding factor. Instead, they are meant to be used as a part of the decision-making process.

Finally, do not take the figures from an calculation literally, Always seek independent advice from a specialist who is qualified and licensed to provide recommendations based on lifetime mortgage and home reversion plans home reversion plans from the whole of the market.

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What is the Equity Release Compound Interest Formula?

Understanding the Equity Release Compound Interest Formula

Equity release can offer a flexible solution for many people to deal with their financial difficulties by accessing the equity built into their home; but it is important to remember that releasing equity from your home is a potentially life changing decision.

Depending on what type of equity release plan you opt for, you either lose ownership of a part, or all of your home, or have a lifelong mortgage secured on your property. Home equity schemes are not for the faint hearted and thorough research and professional advice is key to success.

In the case of roll-up equity release schemes, the interest on the lifetime mortgage keeps on compounding, and the final amount can often end up being so large as to erode all the equity in your home, leaving nothing for your beneficiaries.

Protection from ongoing compounding interest

However, the good news is that all equity release mortgages recommended by any authorised equity release adviser should come with ‘no negative equity guarantees‘. This ensures that the value of the equity release mortgage can never be more than the value of the property, period. This also provides protection for the plan-holders beneficiaries in that they themselves can never end up owing anything to the lender themselves.

In order to calculate whether this situation would ever arise you need access to an equity release compound interest calculator which can help you understand how much the interest on your mortgage could compound to over a certain term.

The viability of an equity release plan from the perspective of the lender, depends on what plan it is. For instance, in the case of an interest only lifetime mortgage, the shorter the term of the loan, the fewer the risks for the lender. But in the case of a roll up lifetime mortgage, the longer the term of the loan, the more interest compounds and the more profitable it becomes for the lender.

Equity release compound interestarises when the interest payable on the equity release loan amount is added to the loan amount itself, and interest is then payable on this combined figure, and so on and so forth. This way, the interest accrues interest on itself, and goes on compounding.

This compounding of equity release interest can quickly result in a large debt, and often this is the reason why many people with roll-up lifetime mortgages could have potentially been left with a negative equity on their loan. However, the no negative equity guarantee fortunately prevents this from ever arising.

Compound interest calculator tools

Without this it could have meant that far from being able to protect some of the equity in their home, they could have not only lost all the equity, but actually ended up owing money to the lender! An equity release compound interest calculator gives you a way to know exactly how much your loan balance will be every year. The calculator uses a simple formula to calculate the compounding interest on the loan amount and uses this to predict how much the amount will have grown to be after a certain period. This can help you plan ahead and get a better understanding of your finances and how much you’re likely to owe the lender after a certain number of years.

It is possible to set up a compound interest calculator on your own computer using software programmes such as MS Excel or Google Spread sheet. It is also possible to use an equity release compound interest calculator available on the internet.

Alternatively, if you would like more help with calculating the compound interest potentially payable on your mortgage, you can seek advice from an independent equity release adviser. They can always request a Key Facts Illustration from an equity release provider of your choice, where the year-on-year figures showing the compounding effect of the interest will be shown.