Print this page

How Much Could You Make from Equity Release?

Posted On Monday, 21 February 2022 20:03
How Much Could You Make from Equity Release?

For most people, their home is their most valuable asset. Equity release is a way of avoiding all of your cash staying locked up in bricks and mortar, without requiring that you sell up and move elsewhere to access it.

This all sounds appealing in principle, and it is especially attractive for the over-55s who want to fund a fulfilling retirement without being hamstrung by the size of their pension pot or the scope of their personal savings.

The question, though, is just how much you stand to make when leveraging an equity release loan. Let’s drill down into the details to find out what’s at play here.

Calculating your equity release accurately

Various factors influence the amount you might be eligible to receive via equity release, and rather than having to do all the calculations yourself, you can harness tools designed to do the hard work for you.

For example, the equity release calculator from Reader’s Digest is a quick, straightforward solution that will give you an estimate in a matter of minutes, and provide you with the information you need to make the right decision going forward.

Obviously such rough estimates should only be used as a starting point, rather than being seen as a guarantee of the amount of equity you could unlock. Even so, it’s convenient to have this figure on hand to help you with your future research.

Considering your age

As mentioned, most equity release products are only open to those aged 55 or older. Even if you fall into the bracket of eligibility, there can be major differences in the amount that you can receive depending on your age at the time you apply.

As a broad rule of thumb, the older you are, the more of your property’s value you will be able to release courtesy of a lender.

Exploring your property valuation

Another clear-cut consideration in any equity release deal is the market value of your home right now. Some lenders will have a lower limit on property prices which they will consider as eligible for equity release, so if yours falls beneath this then you could struggle to get approved.

Likewise you should not expect that the amount of equity that is releasable will correlate exactly with the market value of your home. As with any type of loan, the lender is taking a risk by offering you the cash upfront, and so they build this into the offers they make to prospective customers.

The upside is of course that you can continue to live in your home for as long as you want, and you won’t need to pay interest each month. The interest will still stack up over time, it’s just that it won’t be collected until the loan completes its term, which is typically tied to the death of the property owner or owners.

Analyzing existing mortgage amounts

Equity release is mostly suited to those who already own their homes outright, having paid off a mortgage. However, applicants who still have a small amount of mortgage left to cover could still benefit from equity release; they will simply have to use part of the money they make from this to pay off the remaining portion of the mortgage.

As you can see, there are a whole host of variables that are up in the air when you are trying to determine the size of the equity release you might receive. Even so, it doesn’t do any harm to quickly check what this amount might be based on your circumstances and the value of your property, so don’t be afraid to use the tools at your disposal.

Rate this item
(0 votes)

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries