Anemic state pensions and low cash saving rates have left many retirees struggling to pay the bills. This has led to many people contacting us about equity release, specifically wanting to know how much capital they can access through it.
The good news is that the advisors we work with are experts when it comes to equity release, even if you’ve had bad credit or have been declined by a lender - they could even answer the most common question we get which is “how much equity release can I get?”
How long you’re likely to live - determined by your age, and state of health
The kind of home you live in, and how much it’s worth. The valuation of your home is the main factor in how much you’ll be able to borrow
How do my age and health affect how much I can borrow?
The minimum allowable age for equity release is 55. As a general rule, the amount you’ll be able to borrow will increase as you get older. In a joint application, the age of the youngest applicant is taken into account.
Your health and lifestyle are a another factor. Certain conditions are correlated with reduced life expectancy, and people with those conditions may be eligible to release more. There’s more than a hundred conditions which qualify.
How does my property affect how much I can borrow?
How much equity release you can get largely depends on the market value of your home. This will be the biggest factor in how much equity you can release, as the calculation is taken as a percentage of the current market value.
That said, the kind of property you live in, along with its construction, are also factors. Lenders are often more hesitant to work with non-standard properties, such as those made of unusual materials, or that are listed.
Equity release: How much can I borrow?
Regulations laid down by governing body the Equity Release Council have capped the maximum amount of capital you can release, and some lenders will insist on minimum loan amounts to ensure it’s worth their while - read on to find out what the maximum and minimum amount of funds you could access via equity release are...
What is the maximum amount of equity release I can take?
Restrictions imposed by the Council’s ‘no negative equity’ guarantee ensure that the maximum equity release percentage of value probably won’t exceed 50% - even if you meet the criteria for age and health.
So, how much equity can you release from your home? In terms of loan to value (LTV), most people end up with between 20% and 50% equity release.
The tale below will give you an idea of the maximum equity release loan you can get based on your age and the value of your property...
Value of Home (in thousands)
Please note that these figures are for illustrative purposes only. If you want a clearer idea, jus, speak to one of the equity release experts we work with. They can give you a much more accurate calculation.
What is the minimum amount of equity release I can take?
The minimum initial amount for a lifetime mortgage (the most common form of equity release loan) is £10,000 at most lenders, although some set it at £15,000, and a small minority as high as £100,000 for the more prestigious schemes.
To qualify for equity release, you will need a property worth at least £70,000 at most UK mortgage providers.
What is the maximum loan to value (LTV) for equity release?
Loan to value ratio (LTV) is not a factor mortgage providers base their lending decision on with equity release as the amount you borrow is based on a percentage of your property’s market value, rather than the percentage of it you own.
How much equity do you need to release?
As we’ve already covered, some lenders have a minimum loan amount for equity release. Some lenders set it at £10,000, others at £15,000 and a minority as high as £100,000, if it’s one of the more prestigious schemes you’re applying for.
As for how much you should release, that’s entirely down to your needs and circumstances. If you’re unsure, make an enquiry and the expert advisors we work with will go over your application with you and connect you to the right lender.
Equity release: How much will I owe?
With equity release, the borrower doesn’t have to make any monthly payments. The loan amount plus the accrued interest is typically settled either when the borrower dies or when they move into long-term care, usually via the sale of the property.
You will, however, have the option to pay all or some of the interest as you go. But if the sale of the property does not raise enough to cover the debt at the end, neither you or your estate will be liable to make up the shortfall.
Want to find out if equity release is right for you, or need some expert help in making the arrangements?
We are consistently rated 5 stars on feefo by our customers, mainly because of our high level of service and the fact we work with expert brokers who:
Are equity release professionals
Cover the whole of market
Have relationships with the leading equity release providers
Are OMA and LIBF Accredited
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 0800 304 7880 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.
*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 info 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.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...