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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 4th December 2020*

We receive a lot of enquiries from people who would like to understand how an equity release calculator works in the UK, and get a clearer idea of what information is required to calculate how much a lender may be prepared to lend them for an equity release mortgage.

To answer these questions we’ve put together this comprehensive guide to equity release mortgage calculators where we will cover:

Once you’ve read through the details below, if you’d like to understand more about equity release calculations make an enquiry and we can arrange for an expert to contact you directly.

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What is an equity release loan calculator?

An online equity release calculator is a tool a lender would use in order to make an initial assessment of how much they may be prepared to offer someone for this type of mortgage.

Whilst all lenders will use their own calculator based on their specific in-house requirements, the good news is such tools are not exclusive to mortgage providers.

You can find free equity release calculators on many UK lenders’ or online mortgage websites – including this one.

How does an equity release calculator work?

An equity release calculator doesn’t really require that much information to give you an indication of how much you could borrow, due to the unique nature of this type of lending.

The key outcome that can be gleaned from an equity release calculator is the loan-to-value (LTV) ratio that you may be offered. Every lender will offer different LTVs based on their internal criteria.

The information a lender’s equity release calculator will typically require is:

  • Your age
  • Type of property (House, flat etc)
  • Estimated value of your home

These details will form the basis for how high the LTV a lender’s equity release calculator will suggest they may be prepared to let you borrow. The range of LTVs will vary from lender to lender. Most lenders can offer a maximum loan to value of 50%, some can go as high as 55%.

The table below illustrates the wide variety of LTVs across a range of property values. This gives an indication of how many different outcomes you could receive depending on which lender’s equity release calculator you use.

Property Value LTV = 20% LTV = 30% LTV = 40% LTV = 50% LTV = 55%
£100,000 £20,000 £30,000 £40,000 £50,000 £55,000
£150,000 £30,000 £45,000 £60,000 £75,000 £82,500
£200,000 £40,000 £60,000 £80,000 £100,000 £110,000
£250,000 £50,000 £75,000 £100,000 £125,000 £137,500
£300,000 £60,000 £90,000 £120,000 £150,000 £165,000
£350,000 £70,000 £105,000 £140,000 £175,000 £192,500
£400,000 £80,000 £120,000 £160,000 £200,000 £220,000
£500,000 £100,000 £150,000 £200,000 £250,000 £275,000
£1,000,000 £200,000 £300,000 £400,000 £500,000 £550,000

This is why it’s important to speak with a whole-of-market broker before you proceed, rather than spending any significant amount of time on this yourself. The advisors we work with can introduce you to the UK lenders whose equity release calculator is most likely to return favourable results for you.

If you make an enquiry with us we can arrange for an expert to get in touch and help you with your research.

Can an equity release calculator show me how much interest I could pay?

Yes it’s possible, however, the difficulty with trying to calculate how much interest you will pay for an equity release mortgage can best be illustrated by the table below:

Amount Borrowed Interest Rate Age at outset Age at death Term Interest roll-up Total Amount owed
£25,000 3.55% 56 93 37 £65,885 £90,885
£30,000 3.75% 63 83 20 £32,644 £62,644
£35,000 4.00% 70 88 18 £35,903 £70,903
£40,000 4.20% 77 84 7 £13,349 £53,349

As you can see, the amount of interest you will pay depends on how long you live (which dictates the term) and how much you originally borrow.

What’s interesting with the examples above, it’s the smallest amount borrowed that has the highest amount of rolled up interest due to the term being the longest.

None of us know exactly how long we’re going to live, therefore, trying to work out exactly how much interest we could eventually have to pay back from an equity release mortgage is virtually impossible to calculate.

Most interest rates for equity release mortgages are either fixed at the outset or variable with an upper cap limit. Interest rates can be subject to change, therefore, if you make an enquiry with us we can ask an advisor we work with to get in touch and compare the best deals currently available.

Will an equity release calculator work if I’m under 55?

Equity release is usually available if you’re over 55, therefore, most lender’s calculators will start with this age. If you’re under 55 it can prove difficult to use these tools for this type of lending. For joint applications, the age limit is based on the youngest applicant.

If you’re under 55 there may be other alternatives more suitable for you to consider. A remortgage may be one alternative and whilst an equity release calculator may not be appropriate for this option, most lenders will have a similar tool for this type of lending.

If you’d like to consider other alternatives to equity release get in touch with us and we can arrange for an advisor we work with to contact you to discuss your options.

Why you should speak to an expert equity release broker

At Online Mortgage Advisor we can offer you a first-class service tailored to your own specific needs with access to the most experienced brokers available that:

  • Have whole of market access
  • Know which lenders’ equity release calculators are most likely to return favourable results for a borrower with your profile
  • Can offer bespoke advice to equity release customers
  • Have excellent relationships with lenders
  • Are OMA accredited advisors
  • Have completed a 12 module LIBF accredited training course

Speak to an equity release expert

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 4th December 2020
OnlineMortgageAdvisor 2021 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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