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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.

What is the Formula for a Home Reversion Plan Calculator?

What is the Formula for a Home Reversion Plan Calculation?

Equity release schemes have seen a massive surge in popularity in recent years with figures continuing to rise in 2013. Year to date figures for October shows there has been over £800 million of new equity release funds released, and is set to reach an all-time high of possibly £1 billion by year-end.

This will be a landmark for the equity release industry after years of care in building its reputation through regulation, financial advice and more innovation in product design from the equity release companies themselves. The main growth area in the types of equity release schemes available has been in the field of lifetime mortgage schemes market. Nevertheless, it is the home reversion plans the London equity release mortgage market has to thank. For this is how back in the 1960’s when the former property equity release schemes were invented.

Why the decline in home reversion sales?

Home reversion schemes in comparison to lifetime mortgages have not seen much change in design or structure since their inception. In fact less than 1% of all equity release schemes written in Q3 of 2013 were a home reversion plan! So what is the reason for their significant decline? One word – Flexibility.

Within the equity release sector, there have been products such as home reversion plans that have lost out to other more flexible and secure options that are now becoming available. Flexible terms of lending such as new interest only lifetime mortgages and the enhanced lifetime mortgage UK are now more popular & freely available. Where a release of equity is necessary and advice is required more than 9 times out of 10 advisers will favour lifetime mortgages & for this reason they have effectively made home reversion plans near obsolete.

After all, demand creates supply, and there seems to be little demand for home reversion schemes on the whole. This is perhaps the reason why several companies that used to have a home reversion calculator have now withdrawn the application from their website.

Where can I find a home reversion calculator?

Old home reversion companies of the past had tools such as a home reversion plan calculator which could help people over the age of 65 assess the maximum they could borrow. Two such companies were Retirement Plus of which they provided the data for companies like Equity Release Supermarket to use on their own website.

Alas when Retirement Plus withdrew their hybrid home reversion/lifetime mortgage plan these calculators were pulled. Unfortunately this left a void in the market. More recently Bridgewater have provided a home reversion calculator for advisers to use, but is also accessible to the general public to use with the right-click!

There are some specific reasons for this decline in popularity. The first reason probably is that home reversion involves selling a part of your home, and not many people are comfortable with that thought. The main advantage of home reversion was that it involved no repayment over the loan term; however, with the arrival of flexible new interest only lifetime mortgages home reversion no longer offers something unique.

Advantages and disadvantages of home reversion plans UK

Another reason is perhaps that home reversion involves this selling a part of house at a highly discounted price, so that you not only lose out on the market value when you start the plan, but also do not benefit from any property price rise on that percentage of the equity when the house is finally sold.

Another significant drawback of home reversion plans is that in case you die early and the plan ends, you potentially lose a valuable chunk of your property in exchange for a highly subsidised price. This can be a big risk for your beneficiaries. But with certain new lifetime mortgages, you can get guaranteed inheritance protection in case of early closure, which is a significant improvement.

Home reversion plans are still very much available however, so there are clearly some advantages to these schemes and they suit some clients. They do offer a large lump sum release, there are no monthly repayments to be made, and by selling only a small portion of the home, you can still protect any inheritance you may wish to leave behind. However, enhanced lifetime mortgages available today can surpass the release allowed by home reversion schemes, and still allow you to retain full ownership of your home.

Home reversion summarised

Companies such as Retirement Plus, Aviva, Home and Capital, and Partnership did offer enhanced home reversion plans, which seem to have now been withdrawn. As stated historically, several reversion companies had home reversion calculators on their websites, but with the decline in demand for these schemes and the availability of new more flexible lifetime mortgages, it is difficult to find a home reversion plan calculator today.

However, the home reversion plan in the UK is not dead & buried and still must have a part to play in the overall equity release advice service offered by any qualified adviser.

You can calculator standard results on the best home reversion deals by visiting specialist equity release broker websites such as – www.homereversion.org

Where Can I Find the Prudential Equity Release Calculator for Existing Plan Holders?

Is There a Prudential Equity Release Calculator for Existing Plan Holders?

Prudential is no longer offering lifetime mortgages to new customers. However, Prudential had one of the most successful lifetime mortgage schemes at the time, so there are currently plenty of existing plan holders who still have a Prudential lifetime mortgage plan.

So, can existing customers release additional equity from their property? And if so, is there a Prudential equity release calculator that can help existing plan holders understand how much they could release?

The short answer is that there isn’t a Prudential equity release calculator for existing customers. However, there is way for customers to find out if they can release additional equity from their property and also find out how much, without the need for an equity release calculator! By following some simple steps, it is possible for existing Prudential equity release customers to have additional funds in their bank in as little as two weeks.

Prudential offered their lifetime mortgage in two forms – a fixed single lump sum lifetime mortgage and a more flexible drawdown lifetime mortgage which allowed for more than one equity release lump sum. For those who have a single lump sum mortgage from Prudential, releasing additional funds on the same mortgage may not be possible.

For those who have a drawdown lifetime mortgage with Prudential, there is no need for an equity release calculator to find out how much they can release again. If they have sufficient equity left in the property they can easily release it by making a drawdown request. But first they will need to find out how much they can release.

Check your Prudential annual statement

To do this, it is necessary to check the last annual account statement from Prudential. The statement will outline how much equity is left in the property. If you’re unsure about whether you have a single lump sum or a drawdown mortgage, your statement will also clarify this or contact your local equity release adviser.

The figure you are looking for is the remaining funds left in your drawdown facility. These are unused funds that were set aside from inception of the Prudential lifetime mortgage plan. The basic calculation for remaining fund availability is:-

Total reserve facility from outset – capital withdrawn to date = cash available now

Once you have made sure you can release more funds, you can simply make a request to do so directly from the provider or with the help of an equity release adviser. The drawdown request can be made by filling in a form online, or over the phone by calling the provider.

An equity release calculator tells users if they are eligible to release more equity and how much they can release. For existing customers for the Prudential lifetime mortgage, this is exactly what your annual statement will tell you. You can consult an equity release expert or the provider if you are unsure about the type of mortgage, or need further advice about additional release.

Consider switching plans if unsuccessful

Should you be unsuccessful in your goal to raise further funds with a Prudential equity release, then you will need to consider the alternatives. It will have been over 4 years ago that the last Prudential lifetime mortgage scheme also known as the Property Value Release Plan was written.

If Prudential’s equity release calculation ‘says no’ and you do need extra cash funds then consider an equity release remortgage and analyse whether it would be worth swapping a lifetime mortgage scheme. With interest rates as low as they have ever been, it may not be a bad idea anyway!

However, before you even consider switching equity release schemes, remember the Prudential early repayment charges were linked to the Bank of England base rate which currently is only 0.5%. The latter Prudential Property Release Plans were taken when the base rate was still at 0.5% so they could effectively remortgage without any early repayment charges (ERC’s). However, early plans could have been taken out when the base rate was 4-5%, thus meaning a penalty would arise if the scheme was transferred.

Summary

It would be prudent to seek the advice of equity release remortgage professionals on this basis, as the ERC’s would need building into the switch plans calculation. However, there are analysis tools available on the internet which can do a switch plans analysis for you. This will check your break-even point & highlight the whether it maybe worthwhile to remortgage to a new equity release lender or not, should Prudential not allow additional borrowing.

For a free analysis contact Compare Equity Release on 0800 678 5169 or visit their site by clicking here for their unique switch plans tool page.

How Can the Proceeds from Equity Release Schemes Be Spent?

There are two main reasons why equity has caught on and become increasingly popular in the past few years. Firstly, it allows homeowners to access the cash value of their asset without having to sell it or move out, and secondly, there are no constraints placed by equity release providers on how the money can be spent.

Different people have different reasons for wanting to release equity from their home. Most equity release schemes allow for release either options in the form of a single lump sum or as regular withdrawals from a drawdown facility which can then be utilised as an income. This makes it a flexible option for people with a variety of needs, whether it is someone who needs cash for funding a holiday or someone who needs a supplementary income during retirement.

Having said that, it is important to note that there are some things outlined in the equity release plan contract that one cannot do, for instance make major alterations to the property that could have a significant impact on its value etc. Also, should anyone else move into the property, then the lender needs informing. The lender with then require an equity release waiver form must be signed by the new occupant so as to waive their rights behind the lenders, in case the main party died in the meantime.

In such situations it is always advisable to check with the lender beforehand to gain acceptance of the plans, otherwise should the lender find out any other way you could be in breach of the equity release terms and conditions.

Check the alternatives

Equity release is a flexible tool that allows people to use the released money to meet their individual goals. The key factor in deciding whether one needs to release equity from their property to meet these goals is whether there are other options that could help you achieve the same aims. Therefore, it is the duty of the lifetime mortgage adviser to consider all the alternative solutions that may exist before proceeding with any recommendation for an equity release scheme.

Once these alternatives have been eliminated it is only then that your lifetime mortgage financial adviser can then help you understand if equity release is the best way for you to meet your needs and attain your goals. Discussing your goals with your adviser can also help you understand if there could be another better way to achieve the same thing without incurring the same risks.

For instance, has your adviser consider ALL of the following: –

Would you be better off downsizing to a smaller property instead of releasing equity?
Could you use any existing savings or investments before taking any release of equity?
Be eligible for any means tested benefits that could help you?
Ask your children or relatives for financial assistance?
If home improvements are planned, are there any grants available that could cover the costs?
Consider other types of finance such as personal loans, credit cards, hire purchase, interest only mortgage?
Take in a lodger which could provide a source of extra income?
Reduce one’s expenses to provide additional disposable income?

A financial adviser could help you explore all the possible options and find the optimum solution.

For those who find that equity release is the best option for them, there are many ways in which the released equity can be used and there are no constraints on how the money can be spent. As mentioned above, everyone has their individual reasons for releasing equity, but some popular uses for released equity include a cash gift to the kids or grandchildren, funding a holiday, home improvement works, a new car, repaying an existing mortgage or debt consolidation or even buying a second property such as a holiday home.

Equity release schemes provide the freedom to carry out your long-term desires, something that wouldn’t have otherwise have been possible. However, there is always a word of caution which is that equity release schemes are not suitable for everyone & do come with a health warning – it will reduce your inheritance!

How Could An Equity Release Calculation Help My Retirement Plans?

An Equity Release Calculation Could Help Your Retirement Plans

Financial planning during retirement is becoming increasingly important. With rising living costs, growing costs of care, and a shrinking public expenditure budget, it is only wise to use your financial assets optimally to provide for you during retirement. It is no surprise then that equity release plans have become so popular among older homeowners in recent times.

Equity release plans offer a way to tap into the equity tied up into a home in the form of a cash lump sum or monthly cash payments and use it towards anything you wish. The money is repaid only when the property is sold, which is usually upon death or when you move into permanent long-term care. There are no restrictions on what the money can be used for, and it allows a way to use the cash from your home without the need to sell and move out. Equity release therefore offers a way to optimise your property value without any restrictions on what the money can be used for.

Reasons for releasing equity

Different people may use the release of equity for different purposes. For instance, someone may need a cash lump sum for a holiday, home repairs, or for a cash gift for grandchildren. Cash flow can often be a problem during retirement, and some people may need a regular income to supplement their retirement income in order to maintain a comfortable lifestyle.

Just as there are various reasons for people to want to access the equity tied into their home, there are different equity release plans available on the market to suit different client’s retirement needs. Obtaining an equity release calculation can help one not only to work out the maximum borrowing through any given equity release plan, but also to understand how the money can be borrowed. For instance, whether it can be borrowed as a single lump sum, as regular monthly payments, or as and when required, through a drawdown lifetime mortgage scheme.

Facilities for monthly income?

Most people use an equity release calculation to work out the maximum amount they could borrow, and to understand how this money can be used optimally to get the best returns. While some people may best benefit by borrowing in the form of monthly installments, unfortunately this is not an available option with any of the current drop of equity release companies. The only previous lifetime mortgage provider that offered a monthly income option was from Northern Rock & we all know about their demise!

Therefore, if a regular income is required borrowers will need to consider other options. This may come in the form of the more flexible lifetime mortgage schemes and may choose to borrow through a drawdown lifetime mortgage scheme. Some may also choose to borrow the maximum amount and use it to purchase an annuity or other investment product, although using equity release to purchase a market linked investment product could be potentially risky due to the uncertain returns available in the markets. In fact, other than to create an emergency fund, equity release schemes should never be used for investment purposes and is something a qualified equity release adviser should never recommend.

A qualified equity release adviser can help you understand how an equity release calculation can be performed and the money released best used. The first step to understand how releasing equity could potentially help you during your retirement would be to use an equity release calculator to work out how much money you could release through different equity release plans, and how it could be used optimally to plan for your retirement. Once the parameters have been established & monetary figures confirmed the application process can begin in order to convert your wishes into reality & retirement plans fulfilled.

What About Life Before the Equity Release Calculator?

What about life before the Equity Release Calculator?

The growing popularity of equity release schemes has driven a sea of change in the world of retirement mortgages. For one, increases in demand from customers has led to more flexible, innovative and secure equity release solutions being developed all the time. As more and more players enter the market, there has also been an increase in the number of comparison and information websites whom themselves are innovating to provide new tools to help in conducting equity release research.

One of these latest tools is the equity release calculator which was once a novel tool offered only by pioneering websites like Equity Release Supermarket. Today however, the equity release calculator has become a common sight and very common across the marketplace.

What is an equity release calculator?

An equity release calculator is a highly useful application as it allows users to get a fairly good idea of how much you can borrow from the whole of the equity release market. Useful as it is, though, it is a fairly recent development. Prior to the availability of this simple tool, the only way for potential clients to find out the maximum release available on any particular plan would be to contact the equity release provider either by phone, or in person!

This seemed like an awfully tedious way to find out something that could be calculated rather quickly based on a few simple facts. Companies like Equity Release Supermarket therefore invested in a simple application that, once users entered certain basic facts such as age and property value, could calculate maximum borrowing based on a simple algorithm used by equity release companies to calculate borrowing. This application provided the client with the equity release calculation upon which they could base their spending plans.

Today, numerous websites have an equity release calculator. While this is a good thing that enables users to quickly find out maximum borrowing, equity release calculators are now also being used as a form of marketing or advertising to attract potential customers by only promoting certain equity release plans over others. The point of an equity release calculator is to provide a functional and entirely unbiased tool for users to work out the maximum average amount they could release. And the role of equity release comparison websites is to provide impartial information and objective advice about the different options available.

Using an equity release calculator as a marketing ploy seems not only to compromise the ethics behind providing impartial advice and information on websites, but also undermines the entire point of offering such a calculation application to users.

Nevertheless, the fact is that the equity release calculator offered by reputable comparison sites has provided a hassle free and quick way for users to calculate maximum borrowing from an equity release plan. This can form part of the initial equity release research into lifetime mortgage schemes and act as an in-road into preliminary discussions with your lifetime mortgage adviser.

For further information on how to calculate the maximum equity release lump sum call the Equity Release Supermarket lifetime mortgage department on Freephone 0800 678 5159.

Do Your Maths and Equity Release Schemes Will Add Up!

Equity release schemes have become more and more popular in the past few years. But it is also a fact that equity release schemes still ring alarm bells in the minds of many. The main concern that people have with equity release is that it can erode your estate and leave little equity for your beneficiaries.

Another alarming scenario is where the loan could become bigger than the sale value of the property resulting in ‘negative equity’, where you could potentially owe money to the equity release provider. While these were legitimate worries until some years ago, equity release schemes today involve far fewer risks.

Equity release and regulation

All equity release schemes come with a no negative equity guarantee as schemes these days are incorporated into the Equity Release Council rules & regulations check list. This protects consumers from ever owing more than the value of their house, even if the loan did surpass the current valuation. Basically, the lender will waive any excess, with the worse case scenario being no equity for the children.

Equity release today can be used as a flexible tool to optimise your financial assets to support you during retirement. The fact is that equity release offers a way for older homeowners to access the value that has built into their home, without having to sell their property and move out. Rising costs of living, rising costs of care and ever shrinking pension funds are making it difficult for many pensioners to support their lifestyle during old age.

What can equity release be spent on?

Retirement is seen as the golden period of life, when one should be free to enjoy the fruits of their lifelong labour. Whether it is for a one-off expense such as a holiday, or a home extension, a cash gift to children or grandchildren, or a regular income supplement, many people are turning to equity release as a way to access the cash in their home without having to sell and downsize.

So, are there risks involved with equity release schemes? As with any financial product, it is important to understand the full implications of releasing equity from your home. By releasing cash from the value of the property, you essentially devalue it to a certain extent, and this is bound to have implications for your beneficiaries. However, unlike equity release schemes of the yore, no matter how large your debt, your beneficiaries will never owe anything personally to the equity release lender.

There are various equity release plans designed to suit people in varying circumstances and with different needs. It is important to understand your own needs and priorities and use your financial acumen to find out which type of equity release product suits you best. An equity release calculator can help you work out the numbers with respect to different equity release plans, and consulting an equity release expert can help you understand how different plans can work for you.

The maths can add up to the solution you are looking for, but as ever it is the details you input in the first place the determine the end result. Caveat emptor as they say!

How Much Equity Release Should I Borrow?

5 Q&A’s – How Much Equity Release Should I Borrow?

The crucial decision with any equity release application is deciding on how much tax-free cash you should take. In order to obtain the correct advice with regards to these lending decisions you should certainly consult with a qualified equity release adviser.

By discussing your capital requirements, both immediate & in the future, you can assess which type of lifetime mortgage would be favourable for you & how much cash you should apply for.

Five important questions you should therefore be asking yourself are:-

What are you spending plans for the first 12 months?
Do I really need all the money upfront, or can I postpone some until a later date?
Should I add the set up costs to the loan, if so, what impact with this have?
Should I leave the release of equity until I am older, so I can take more cash?
If I decide to do a drawdown plan, what impact will rising interest rates have?

These questions will provide a solid platform from which your decision can be made and for the right equity release reasons. So why are more & more people seeking this type of lifetime mortgage nowadays? First let’s look a bit deeper into equity release schemes themselves.

So what is the point of an equity release plan?

An equity release plan allows you to turn some of the equity built into your home into usable cash. While selling the home and downsizing is one way to do this, equity release schemes offer a way to access the cash without the need to sell the property and move out. Remember, equity release schemes should always be considered a mortgage of last resort, once all other alternatives such as downsizing have been discussed with your adviser.

People use equity release for various reasons. Some may need a cash lump sum for a one-off expense, while others may use equity release to supplement their income and support their lifestyle during retirement. Additionally, and more recently, we have seen an exodus from the lifestyle reasons for releasing equity. More people are now releasing equity for family reasons such as gifting to children, or repayment of mortgages that sold the interest only mortgage time bomb. The reason for borrowing and the amount, will ultimately determine what equity release plan will offer the best value for you.

There are a number of different equity release schemes available on the market today. Finding the right equity release can be confusing but thankfully there are comparison and advice websites that offer impartial advice about different plans, as well as useful tools such as the equity release calculator. Equity release calculators can help you get an idea of how much you could borrow and how much it would cost you based on your age, property value and any inheritance protection you may want.

Analyse your spending plans carefully

While using such calculators, they can help you find out the maximum amount you could borrow, it is not necessarily how much you should in fact borrow! Borrowing the maximum is of no use if you do not need the money straight away. An equity release plan is essentially a loan, and you need to pay interest on the amount released. It makes no sense to borrow a large sum of money, simply to put it in the bank earning next to no interest, and pay upwards of 5% interest on the money to the equity release lender.

This is why maximum borrowing does not always make sense. The general rule of thumb is to borrow the amount that would be sufficient to carry you through for about one year. There are equity release schemes, known as drawdown schemes, which allow you to borrow money in portions, as and when you need the money. For those who do not need the maximum lump sum release, but would like to have the option of borrowing more in the future, drawdown lifetime mortgage schemes can offer the optimum solution.

An equity release plan can be a flexible and innovative way to use the equity tied into your home without selling the property. As equity release plans have become popular, they have also become more flexible in nature. Depending on how much you need to borrow, and your individual circumstances, you can find an equity release plan that can suit your needs. An equity release calculator can give you an idea of how much you could borrow, and get a picture of how different equity release schemes would work for you.

For an individual meeting to discuss how much equity release to borrow, contact the independent equity release specialists on 0800 471 4796 or email info@equityreleasecalculator.net

Will an Equity Release or Interest Only Lifetime Mortgage Calculator Provide the Biggest Lump Sum?

Experience shows that when it comes to finding out which scheme offers the maximum equity release, confusion reigns over whether it’s the roll-up equity release plan or an interest only lifetime mortgage. With equity release schemes becoming very popular in recent years, more people than ever are conducting their own research before approaching an equity release broker to implement their plans.

Roll-up and interest only lifetime mortgages give homeowners the option of releasing some of the equity tied up into their property, without the need to sell the home and move out. The cost of living during retirement is on the rise, and with shrinking pension funds, poor annuity rates and increasing costs for care, many retirees are looking for flexible ways to optimise their financial assets. There are many different equity release plans available today, and which equity release mortgage suits you will depend on what exactly you need.

For instance, someone may need an extra cash injection for a one-off expense, while someone else may need a regular income to supplement their retirement income. Someone may want to release equity while also protecting some of the equity for their beneficiaries, while someone else may find it more important to understand what is the maximum equity release cash lump sum? Which equity release plan works for you will therefore depend on what it is you need and one of the ways of establishing this is with the use of equity release calculators.

If you need to release a maximum equity release lump sum from your property, roll-up equity release plans generally come out on top, when compared with interest only lifetime mortgages. While the exact terms of the plan depend on which equity release plan you look at, generally speaking roll up equity release plans can afford to allow for a bigger lump sum release than interest only mortgages, and you can see this by checking with different equity release calculators.

Stonehaven enters the maximum calculation

One exception to this would be the Stonehaven Interest Select Max Plan, which allows for maximum borrowing. Stonehaven’s Interest Select plans offer a viable alternative to roll up type equity release schemes, in which equity release can either be done on an interest only or roll-up basis. Any interest repayments are considered to be contributions towards the repayments, so you are free to pay as much or as little as you wish each month. It is also possible to stop payments altogether and convert the plan into a roll up equity release plan. This is a great safety net for those who require security of tenure and peace of mind.

The Stonehaven Interest Select Max option allows for the maximum lump sum release, at a fixed interest rate for the entire length of the plan. For instance, for a male applicant aged 65 years, with a property valuation of £200,000, with the maximum select option, you could release as much as 29% of the property value. This works out to £58,000, which is comparable to if not higher than some roll up equity release plans. However, this still doesn’t result in the maximum equity release.

Absolute maximum enhanced calculation

A recent innovation in the field of lifetime mortgages is the enhanced lifetime mortgage plan. Effectively using health as a factor influencing the loan-to-value, equity release underwriters will gather information on one’s health and lifestyle via a questionnaire. How severe the health of the individual(s) is will affect the size of the maximum lump sum. Therefore, someone who is overweight, a smoker, maybe suffered a heart attack, diabetes or cancer could find their health has actually helped them attain a bigger lump sum. Therefore, to get an accurate idea of the maximum lump sum ensure you have access to an enhanced lifetime mortgage calculator aswell as the standard devices.

Which equity release scheme allows you to release maximum equity depends on your individual circumstances, including age, property valuation and now health. Enhanced lifetime mortgage plans will usually offer the greatest lump sum, but on certain occasions, Stonehaven’s Interest Select Max option can prove to be a more viable alternative should you have the disposable income to make monthly payments and thereby protecting your next generation’s inheritance.

How Does Age Affect the Release of Equity Calculation?

Equity release is a way to withdraw some of the cash value tied up into your property. While traditionally the only path for a release of equity would be to sell the property, equity release offers a more flexible way to continue living in your home while accessing the cash tied up into the property. This can only be facilitated by receiving advice from a qualified equity release consultant, in conjunction with an equity release provider themselves such as Aviva, Just Retirement, Hodge Lifetime & many more of these niche mortgage lenders.

First an introduction to the types of equity release

There are two types of equity release products – lifetime mortgages and home reversion plans. While lifetime mortgages are loans taken against the value of the property, home reversion involves notionally selling a portion of the property with the lender recovering the proportional value when the house is sold. In all equity release schemes, the lender recovers the money from the sale of property, which happens only after you have died or moved into a care home.

Whether it is a lifetime mortgage or home reversion, the release of equity is basically money that you receive from the lender, and which the lender can recover after the plan ends. How much the lender can afford to lend, at what rate, and whether they can afford to lend at all, depends on the value of the property, the amount of equity that needs to be released, and the expected term of the loan; namely life expectancy.

The feasibility and exact terms of an equity release plan therefore depend on different relevant factors, some of which determine the expected term of the loan or plan. Since most equity release products have no fixed term, and go on until the end of life, or until you move out and into permanent care, it is the health and age of the client that determines the expected term of the equity release plan. The age of the applicant is therefore an important factor that significantly affects the release of equity.

Relationship between age & release size

Typically, the longer the term of the loan, the more the risks are for the lender in that the loan will compound over a longer duration. As there are many variables built into life expectancy, the lender does take the risk that: –

House prices may remain static, even fall over the term of the mortgage
The equity release loan interest will accrue for longer than the average life expectancy
The health of the individual will be good, thus leading to prolonged longevity
Condition of the house may deteriorate, leading to un-saleability

All these factors place a greater strain on the insurance policy that equity release lenders have on these loans – the no negative equity guarantee. They actuarially calculate the average life expectancy and then pitch their loan-to-values in accordance with this data. They will win on some cases, but lose on others & this is all factored into the no negative equity guarantee insurance policy. The danger for lenders in hoping they do not need to use this insurance policy, lie with the outside factors mentioned above that could seriously affect these chttp://www.equityreleasecalculator.net/wp-admin/post.php?post=46&action=editalculations.

Therefore the younger the applicant, the higher the risks, and the older the applicant, the fewer the risks involved for the equity release provider. This is why the older one is, the bigger the release of equity can be offered by these lenders. Hence, when considering a release of equity, do your sums first and always obtain a Key Facts Illustration from your equity release adviser. This will detail the exact amount, year-on-year, how much the balance will reach in the future. A useful piece of data for considering what the final balance may be, albeit guessing the length of the term can be an unnerving experience!

Loan-to-value summary

The minimum age for most lifetime mortgage products is 55 years, and generally speaking, the further away you are from this age, the more you can borrow. In fact, if you are aged 55, currently the maximum lifetime mortgage scheme will allow is 20.5%. This will steadily rise as one gets older and as a rule of thumb will be 1% each year you get older. Most equity release companies allow maximum release of equity only for older clients upto approx. age 90+ with an overall maximum release from any lender of 55%.

However, home reversion plans do not commence until age 65, some 10 years later. The calculation for the size of a home reversion release is based again on age, but also the sex of the individual(s). The reversion provider will receive a proportion of the house value in exchange for a tax-free cash lump sum to the homeowner.

The difference between the home reversion scheme and lifetime mortgage is that with a home reversion you can sell 100% of the value of the property, the converse relationship exists with a lifetime mortgage. However, even selling 100% of the property doesn’t mean you receive 100% of its value. This will usually be half of the equivalent percentage sold. Thus if you sold 100%, you are likely to receive around 50% of the value. Again, like a lifetime mortgage, the older you are, the greater the percentage over & above this 50% figure you will receive.

All these examples based on age, property value & health can be inputted into a good equity release calculator to provide the results you require in order to complete your equity release research.

If unsure call 0800 471 4796 to speak to a qualified independent equity release adviser who can provide guidance on the best schemes available.

Where Do I Find an Enhanced Equity Release Calculator UK?

Does an Enhanced Lifetime Mortgage Calculator UK Exist?

So what do equity release calculators do, and is there such a thing as an enhanced lifetime mortgage calculator UK?

Until a few years ago, a lifetime mortgage calculator was quite a novel application, only offered by a few select websites that allowed users to quickly calculate how much their equity release plan would endear them with as a tax-free cash lump sum. Today of course, there is no shortage of lifetime mortgage calculators on the internet, as most mortgage comparison and advice websites offer this useful application to users.

The next stage in the evolution of lifetime mortgage calculator was the introduction of the enhanced lifetime mortgage calculator on the internet. Of the four equity release companies that offer enhanced lifetime mortgages, (Aviva, Just Retirement, more2life & Partnership) an accurate enhanced calculator will pull the maximum release from each of these schemes & display these results.

An enhanced lifetime mortgage plan is basically a type of loan that allows you to access the equity tied up into your home, but takes your state of health into account. The mortgage is repaid when the property is sold, when the term of the plan ends, which is usually after you die or have moved into permanent care. At that stage, your beneficiaries will usually have 12 months to repay the lender, which invariably will come from the sale proceeds of the property.

There are different types of enhanced lifetime mortgage schemes UK, each with different lending and repayment criteria. Add to this the fact that each variable, including the applicant’s age, the value of the property, the amount needed to be released etc. determines how the loan is underwritten. The overriding factor with regards to the maximum enhanced release being possible is the severity of the health records. Basically, by completing a health & lifestyle questionnaire and answering the questions therein, will determine the effect it will have on the maximum equity release.

An enhanced lifetime mortgage calculator takes into account the type of equity release scheme, the lending terms of the particular provider, as well as the applicants’ variables such as age, property value, health and loan amount etc. to calculate how much the plan will cost.

An enhanced lifetime mortgage UK plan is different from a regular equity release scheme in that it has more generous terms of lending, based on certain special circumstances related to the life expectancy of the applicant. When it comes to a loan, the shorter the term of the loan, the lower is the risk for the lender. As such, in circumstances where the applicant has compromised health, a chronic illness, or a lifestyle that impinges on their life expectancy, lenders are able to lend at more generous terms.

In addition to offering the regular lifetime mortgage calculator, some equity release comparison websites also have the enhanced lifetime mortgage calculator. For instance, Equity Release Supermarket offers users the choice to get a quote for enhanced lifetime mortgage based on additional relevant information.

So why does an enhanced lifetime mortgage calculator UK need additional information? Because this is the information that it uses to project the expected term of the loan, which in turn determines the figures. The additional information is usually a simple health & lifestyle questionnaire with questions about your age, any serious illnesses, and any chronic health conditions you may suffer from.

The lifestyle questionnaire is used to find out whether any impairment one has will be acceptable to the lifetime mortgage companies to form the basis of any enhanced terms. These impairments or lifestyle choices that help qualify for the enhancements are as follows: –

You height, weight & for some lenders your body mass index (BMI)
Whether you smoke any form of tobacco e.g. 10 cigarettes per day for the last 10 years
Diagnosed with high blood pressure which needs medication
Entered hospital due to a heart attack, stroke or suffer from related illnesses such as angina
Struggle with diabetes requiring medication or even insulin
Diagnosed with cancer needing therapy (excludes certain skin related cancers)
Diagnosed with Parkinson’s disease or multiple sclerosis

Just retiring on the grounds of poor health can get you an enhancement or even the fact that you are taking prescription medication e.g. aspirin can help.

Therefore, similar to the underwriting of enhanced annuities, the equity release market has also embraced the more in-depth knowledge our insurance companies have in associating ill-health with financial products; equity release now being the latest.

But do not fear as there are websites that can help guide you to the relevant companies & tools you can employ that will provide you with the enhanced calculations to inform you of the difference any enhancement can make to the tax-free lump sum.