The definition of ‘Equity‘ is the value of the home minus any outstanding charges or mortgages secured against the property. The equity you retain in your home is often considered to be tied up and constrained, in the sense it is unavailable to utilise. The theory for many homeowners is that you are unable to access it without selling your property.
Using an equity release scheme, an individual can unlock some of this equity in order to gain a lump sum of money or ongoing financial income from their property.
If you are reaching retirement age or even in retirement age and you are thinking about ways to improve your financial standing, or perhaps would benefit from a large lump sum of money then you may ask yourself how much can I borrow?
Borrowing Money to Help Retirement
The answer to this scenario is by using the latest online equity release tools which are now provided for the benefit of potential equity release customers. The feature of many newer equity release websites is the provision of an online equity release calculator which answers the question directly as to how much can you borrow from your property. The calculation process should be straight forward and provide the figure for the maximum equity release availability in the market. Look for a lifetime mortgage calculator, if home reversion schemes are not suitable for you.
Better lifetime mortgage calculators are from companies such as Compare Equity Release.com who will also offer results for an enhanced lifetime mortgage. These schemes will offer bigger lump sums due to medical underwriting due to the applicant(s) having ill-health. Additionally, Compare Equity Release.com has a further interest only lifetime mortgage calculator. This is helpful should you not wish for the interest to roll-up and quite happy to make monthly payments of interest only. The answer therefore is to shop around.
Advantages of Equity Release Calculators
The great thing about these equity release calculators is that you can find out how much equity you would be able to release from your home without actually signing any contracts or taking on any commitment. They should be free to use and not have to give too many personal details in order to reach a conclusion. The whole concept of these calculators is to provide a ball-park figure as to the maximum equity release.
How Calculators Work
Online calculators do the work for you; however, it is still a good idea to know why you are being asked for certain details about your life when looking for equity release products.
• Age: this is a qualifying factor that determines if you are old enough for the product. It also factors into life expectancy. A person 55 years of age should have another 20 years at least. A person who is 75 may not. Life expectancy is based on an average. In a world where humans are living longer than in previous decades it matters a great deal if you have 20 or 40 years left of your life. The younger you are the less you can borrow on the assumption you will live longer and thus the loan will be outstanding and accruing interest longer.
• Home value: the appraised value of your home at current market information is necessary to determine how much equity you can release. The lower your appraisal the fewer funds available. It is never possible to take 100% of the equity since interest will accrue. For home reversion, buyers always offer a percentage based on how much of the home you wish to sell and their potential investment value. Houses can appreciate so this is factored into contract costs, but may not reflect in the calculator.
• Interest rate: you will not have to enter an interest rate. The calculator will provide this for you based on the company or website whose calculator you use. The current interest rate for equity release products is used, but may not be awarded to you.
The result in the calculator is a base line for potential amounts and not considered the true amount of the offer. Each company will look at your situation and devise a plan based on you and your needs.
If you are currently reviewing which the best equity release schemes are, then it is advisable to use such online equity release mortgage calculator to gauge both your eligibility and also how much you could benefit from it. This knowledge, combined with professional and independent financial advice, will help make the equity release decision process easier. Call 0800 678 5169 to speak to an equity release adviser.