Tag Archives: Equity Release Schemes

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.

How do I Establish the Maximum Release with a Home Equity Calculator?

Equity release can be a very useful tool and are suitable for those who want to optimise their assets. It allows you to take a release of equity that has built-up in your property over time. This is where retirees benefit from property ownership of the years. Although there have been many peaks and troughs in house values, the overriding effect has been the creation of mass equity in people’s home. However, is this all beneficial when you cannot get your hands on it?

These equity release schemes can be held even while you are continuing to live in the house, but you do retain 100% ownership rights. The equity release market has opened up in recent times, and today, many different types of equity release schemes and providers are available.

Different equity release schemes operate on different terms. For instance, a lifetime mortgage is available to individuals over the age of 55. In the case of joint applicants, the youngest applicant must also over the age of 55 years. So in a lifetime mortgage, the age of the applicant’s and the value of the property are the main criteria used by the lenders underwriters.

In case of enhanced lifetime mortgages (poor health persists), the main criteria are the health of the applicant’s, age of the applicants, and the value of the property. Each case needs to be assessed individually to determine how much equity can be borrowed. However, it is possible to predict how much you could borrow through the different equity release schemes available on the market through a tool known as equity release or lifetime mortgage calculators.

Calculation qualification criteria

An equity release calculator is an online tool that is designed to use the data provided by the user to work how much equity they could release. The equity release calculator can, based on the age of the applicant, approximate the value of the property, health and lifestyle circumstances of the applicant, and current market data, work out how much an applicant will be able to borrow. However, the maximum figure shouldn’t necessarily be withdrawn all at once. The figure should only be used to ascertain whether you financial requirements can be met, or not.

This can be a useful way to not only determine how much money an equity release scheme can help you borrow, but also the type of equity release scheme that could allow you borrow the maximum amount. The home equity release calculator may not be able to give an entirely accurate figure, as that will ultimately depend on the lender, but it proves to be a very good way to find the right direction in the quest to find the right equity release mortgage.

The free equity release calculator tools can be found online, on reputable and reliable financial comparison sites, or on equity release advice and information websites. It is free to use and a great way to get a sense of which equity release plan might be the most suitable for your needs.

What are the Top 5 Equity Release Calculators?

Review of the Top 5 Equity Release Calculators

A good equity release calculator is one that is free, simple to use, transparent and offers impartial results. While there are numerous websites offering equity release calculators, only a good and truly objective calculator can help you get a fair idea of how much you could release. Here’s a list of the top 5 equity release calculators available today: –

1. Equity Release Supermarket – are one of the original independent equity release companies offering advice and guidance about the different equity release schemes available in the UK. In fact, this was one of the first websites to develop the basis of the equity release calculator for users to calculate the maximum release. The calculator itself is simple to use, well designed and gives quick and comprehensive results every time. Two results are published by this company, which is more than most. Equity Release Supermarket not only provides the standard maximum equity release, but also will provide the figures for an enhanced lifetime mortgage.

This means that if you have poor health you also receive a higher calculation figure which could be applicable. As always they state this is acts as a guide & should endeavour to contact their advisory service on 0800 028 3104 to obtain an accurate quotation. Equity Release Supermarket has an extensive database of providers and plans and its comparison tools let you search the entire equity release market to find the most suitable deal. Once you calculate the maximum release you are provided with the option of whether you wish to submit your details to receive further advice & ensure qualification for any of the lifetime mortgages available in the whole of the market.

Mark Gregory is their founder & can be contacted at mark@equityreleasesupermarket.co.uk

2. Compare Equity Release – CompareEquityRelease.com is one of the best comparison sites in the equity release sector, offering information and guidance about all the different equity release & home reversion products currently available in the market.

The website is easy to use, well designed, with a convenient equity release calculator app that lets you answer the most important question that anyone has while considering equity release – ‘how much can you borrow?’

Compare equity release is the only website that goes one step further than providing a standard & enhanced lifetime mortgage calculation. Not only has a free lifetime mortgage calculator, but also a free interest only lifetime mortgage calculator. It is one of the few websites that compares between all available equity release plans to come up with the maximum potential release for any given age. The style of the two calculators is modern & in keeping with today’s internet savvy silver surfers.

CompareEquityRelease.com can be contacted on Freephone 0800 028 3104 or by email at admin@compareequityrelease.com

3. Equity Release Calculator – EquityReleaseCalculator.net is an independent calculation website that provides useful information on all matters relative to an equity release calculator. Therefore, if you require further knowledge on how these calculators work, plus the pros and cons of an equity release calculator, then this site holds a mass of information on the subject.

The site also features many articles on the subject of how to release equity and what is equity release. So there is plenty of information abound on the calculating of the maximum equity release.

4. Equity Release2go – EquityRelease2go.com is a relatively new independent equity release website that offers a free equity release calculator. The website itself is simple to navigate and the calculator is easy to use if somewhat difficult to locate on the website. Additionally, EquityRelease2go.com have a separate section detailing the best equity release deals available including cashbacks, free valuations & reduced interest rates available to its customers.

Being a relatively new website, certain features are set to follow which given the message the site provides should be soon!

However, they can be contacted on 0800 028 3104 or by visiting their contact page here – http://www.equityrelease2go.com/contact

5. Aviva Equity Release – their equity release eligibility calculator performs many functions; qualifies your age, property value and property type. In addition you have the option of inputting an inheritance protection percentage which will affect the ultimate result.

This level of options can be afforded as the Aviva equity release calculator only works its calculations based on its own products which are the Lifestyle Flexible Option and the Aviva Lump Sum Max.

Therefore, the results shown are only relevant to Aviva’s own equity release plans & do not represent the whole of the market. If you are looking for the maximum equity release from the whole of the market there may be companies that offer larger releases of equity out there.

These are some of the most objective, impartial and easy to use equity release calculators. They are free and can offer an instant quote of the maximum release for your age and property valuation. The more established and reputable the company, the more reliable they are likely to be!

How Can I Use an Equity Release Calculator to Find the Best Lifetime Mortgage?

Equity release plans are a type of loan that allows property owners to withdraw money from their residential home. These loans, in previous years, were just for property owners that were over 65 years of age and older. However, today, the equity release providers have tended to offer the loans to property owners of 55 or more.

Equity release schemes are a great means to acquire a lump sum of money or monthly payments. The advantage of the equity release loan is that typically, it does not have to be paid back until the time of the sale of the property, or the 2nd borrower passes away.

There are various sources to help property owners find the best equity release providers that offer the most competitive rates in the industry. Online is one of the simplest and most convenient means to find the many lifetime mortgage lenders. Some of these equity release providers utilise innovative tools for the property owner such as equity release calculators, which are a simple means to determine just how much equity you can withdraw from your main residence. The advantage of the equity release calculators on the various websites is that you are able to shop, compare equity release deals and get a general idea of the maximum release of equity lenders will offer.

How do equity release calculators work?

Equity release calculators are convenient and completely confidential. The better equity release calculators can provide two maximum lump sum calculations. The reason being that the roll-up lifetime mortgages can be based on a healthy & an enhanced lifetime mortgage rate.

For example a single male, age 65 & in good health would be able to raise a maximum of 30% of the property value with Aviva on their Lump Sum Max plan. However, should the same male suffer from a history of poor health such as high blood pressure, taking mediation, heart trouble or cancer then the maximum release could rise to 38.5%. On a property value of £250,000 this could equate to an additional £21,250 in borrowing power.

Beware of imitations

A good equity release calculator will provide these two figures accurately & under no obligation. So beware of some equity release brokers offering a calculator where they will try & request your personal details in order for some sales person to then contact you. These calculations should provide you with answers not have to necessarily having to come from an adviser.

The mechanics of an equity release calculator

The calculators are very simple to use. The property owner is only required to input simple information that is specific to their existing property, such as their ages, current property value, and any outstanding mortgage amount. Within seconds of submitting these details the results should be published. Websites such as EquityReleaseCalculator.net provide equity release calculators that can offer three sets of results on their one site: –

Standard roll-up lifetime mortgage maximum lump sum
Enhanced (impaired life) maximum roll-up lifetime mortgage
Interest only lifetime mortgage maximum lump sum

When a homeowner decides on a UK equity release scheme, they should ensure that the lender they are dealing with is Financial Conduct Authority (FCA) accredited and that the loans that they offer meet the FCA guidelines and regulations. This provides the property owner with the assurance that they receive a safe and fair loan and that the company is trained in FCA regulations. Additionally, all schemes they deal with should be members of the Equity Release Council (formerly SHIP) which provides extra safeguards such as the no-negative equity guarantee, early repayment ability & moving house option.

Summary

If you are at the early stages of equity release research & looking for the best deals, you need to now firstly whether you can actually borrow the amount required. Look for an independent equity release adviser such as the Compare Equity Release company with nationwide financial advisers. Once the optimum lump sum is established they can then source the best equity release deals in the whole of the market.

If you wish for a calculation then Compare Equity Release are available on 0800 678 5169.

How Much of a Payout Can You Expect With Equity Release?

How Much of a Payout Can You Expect With an Equity Release Plan?

The most important question that will come to mind, whenever you’re considering equity release, is exactly how much of a payout you can expect to receive if you commit to such a scheme? The simple answer to this question is by no means cut and dried and this article is intended to help you recognise some of the factors that will eventually dictate the amount of money that you can expect to receive. Ultimately, it will be an equity release calculator that provides the answer to this question. However, in order to obtain a calculation several factors need to be ascertained.

Qualification criteria for equity release

Of course, the first fundamental factor that will be taken into consideration for equity release will be your age. With equity release schemes, the minimum age is 55 years; however, there are some types of plans such as home reversion plans, where the age may actually be set at 65. The older you are when you choose to take out an equity release plan, the more money you can expect to release through your property. This makes sense as it means that the lenders will be able to take control of your property more quickly in the event of your death or move into permanent health care.

The next important criteria that will be taken into account is the actual value of your property. Obviously, the higher the value, the more money could potentially be released to you in terms of a home equity release scheme. There are various websites that provide upto date sales in the locality which offers an insight into current market valuations. However, bear in mind that the valuation is conducted by an independent firm of surveyors. They will assess the market value based on a relatively quick sale and use similar properties that have sold recently to gauge the price point.

If you are looking to make a joint application for equity release, the lender will tend to focus primarily on the youngest applicant and this is likely to mean a lower payout if there is a large age differential. This is because this youngest applicant would be expected to remain within the property for longer, due to their extended life expectancy.

Also, it is imperative that both parties are over the age of 55, otherwise lenders will not accept any application if the property is in joint names. However, if this is your situation there is still a way of taking equity release in one parties name, if they are willing to come off the deeds. This is a specialist area of advice and one that an experienced equity release adviser can discuss & outline the pros and cons of taking this course of action. Please call someone such as Equity Release Supermarket whom have appropriate later life advisers on this legality on 0800 678 5159.

How much does an equity release calculation cost?

There are numerous sites on the internet which offer equity release calculators and these are an ideal way of ascertaining the maximum payout that would be available to you through an equity release plan. These are freely available without any initial commitment on your part and are a great way of starting to learn about exactly what equity release schemes may be able to offer you. Never pay to use one, as free equity release calculators are widely available on the internet.

Calculation examples

The most important question posed by people who are looking at equity release plans is the maximum release possible. With schemes that start at age 55, Aviva usually provide the maximum lump sum which is 20.5% of the property value for a single borrower. Thus on a property value of £250,000 a single 55-year-old could release upto £51,250. This amount rises steadily, usually at the rate of 1% for each year one gets older, so at age 85 the maximum release on standard rates by then is 52% of the property value equating to £130,000 in this example.

Enhanced lifetime mortgage benefits

However, a recent innovation in this area of maximum releases has been the introduction of the enhanced lifetime mortgage plan. Based on health & lifestyle questionnaires, the more serious your health situation means the greater the size of the lump sum offered. Again, this is down to life expectancy which for ailments such as heart trouble, high blood pressure & diabetes can affect matters.

The effect of ill-health can make a significant difference if one is looking for the absolute maximum release of equity, possibly for mortgage repayment or debt consolidation purposes. An impaired life 55-year-old with a property value of £250,000 could now release upto £85,250 – an extra £34,000!

To establish whether you qualify for an enhanced lifetime mortgage contact equity release mortgage specialists such as EquityReleaseCalculator by calling Freephone 0800 471 4796.

How Best to Use an Equity Release Calculator

How Best to Use an Equity Release Calculator?

With people over age 55 looking to financial products to help them to achieve their goals, it is becoming increasingly obvious that equity release calculators are achieving a fair amount of interest. For some, equity release calculators enable people over 55 to ascertain whether they can raise enough finance for a specific project or major purchase. By calculating the maximum equity release possible will help retirees ascertain whether their objectives can be fully met, or contingencies made.

Others see the benefits of an equity release calculator as a way of assessing how to supplement their pension, which has lost so much value in the past few years. With annuity rates having fallen significantly over the past years, the current return on a capital lump sum for income purposes has become a major threat as to the future of whether an annuity now provides good value for money.

Finding out how much you can borrow

Whatever the reason for wanting to find out more about equity release schemes, the best place to start is to find out how much can be borrowed. The only way to ascertain these figures is via an equity release calculator. For all these people looking towards equity release as an option then a discussion with their financial adviser is an important step toward understanding more about what an equity release plan can offer. However, by using an equity release calculator, such people can go into the conversation with a bit of additional information which might help to make the proceedings that much easier.

Enhanced lifetime mortgage calculator

Remember, if you suffer from ill-health either now or in the past then seek an equity release calculator website that offers answers on an enhanced lifetime mortgage basis aswell. If you do qualify for an enhanced equity release scheme then you will be offered a greater maximum lump sum than the norm.

Such companies offering enhanced equity release schemes are the likes of Aviva, Partnership, more2life and more recently Just Retirement with their Lump Sum Plus Plan. Check with an Equity Release Council (ERC) & Financial Conduct Authority (FCA) regulated equity release adviser for further information & whether you can qualify for the maximum lump sum, if that’s the amount you require. There are many equity release calculators on the internet. They are not like a normal mortgage calculator, but rather a form in which different parameters are set.

What factors are used in the calculation?

In order to obtain an accurate lifetime mortgage calculation the equity release lender needs the following information as a minimum: –

the value of the property
the property type (e.g. house or flat)
the age of the youngest applicant (min 55)

This data will provide the maximum cash release figure for a healthy person.

To further assist & possibly achieve a greater lump sum than standard rates, an impaired life equity release plan maybe available. If you have suffered from any of the following illnesses, then you may qualify for what’s termed an ‘enhanced’ or ‘impaired’ equity release plan:-

suffered from angina, heart attack, coronary bypass surgery or angioplasty
diagnosed with cancer, leukaemia, Hodgkin’s disease, lymphoma, tumour
diagnosed with diabetes which is controlled by medication or insulin
whether you smoke more than 10 cigarettes or rolled tobacco per day
have high blood pressure (hypertension) which requires medication
previously had a stroke (CVA)
diagnosed with MS (multiple sclerosis) or Parkinson’s disease requiring use of a walking stick or aid
taken early retirement due to ill-health?

This information is usually free & simply one click away once the information is entered.

What answers will equity release calculators provide?

The amount shown on an equity release calculator is the maximum tax-free cash lump sum possible, and this makes it a good place to start discussions about the implications of this figure and what the next steps are. Thankfully, when the results are provided there is usually also the ability to make contact with an independent financial adviser, who can then assist in making further recommendations about an appropriate equity release plan.

Note that some people might prefer to take out a smaller mortgage than what is shown to be available on the calculator, and this is possible. In fact, it is most likely going to be the case, as your equity release adviser will explain. Don’t assume you should always take the maximum release. This will erode the equity in your property quicker than by taking a lower initial amount & further top-ups in the future.

Any responsible equity release adviser will only advise you take an initial amount to cover your first 12 months of financial support. This will mean a lower amount of interest to pay in the shorter term. With the advent of drawdown equity release schemes, you can take the remaining tax-free lump sums as and when you require them. The minimum’s future drawdowns can vary between lenders, however even Aviva’s Flexi Plan now has a minimum of just £2,000 a time. This will save your estate £1000’s in the long run and also leave more in the kitty for yourselves at a later date not having paid as much interest.

Therefore, when initially making considerations about what home equity release plans can do, equity release calculators are a great place to start.