Equity Release Calculator 2025

Equity release is available to UK homeowners aged 55 and over, with a property worth at least £70,000. The property must be your main residence, in good condition, and typically have low or no outstanding mortgage. You must own the property outright or have a small remaining mortgage that can be paid off with the equity release funds.

The amount depends on your age, property value, and health. Typically, you can release 25-55% of your property value. At age 55, most lenders offer around 25%, increasing by approximately 1% per year. By age 85, you may access up to 55% of your property value. Enhanced rates may be available for certain health conditions.

Yes, with a lifetime mortgage (the most common type), you retain full ownership of your home. You have the right to live there for life or until you move into long-term care. The loan plus accumulated interest is repaid when your home is eventually sold. With home reversion, you sell a percentage of your home but retain the right to live there.

Costs include arrangement fees (typically £1,500-£3,000), valuation fees, legal fees, and ongoing interest charges. Risks include reducing your inheritance, potential impact on means-tested benefits, early repayment charges if you want to move, and compound interest growth over time. Always seek independent financial advice before proceeding.

Yes, alternatives include downsizing to a smaller property, taking out a standard mortgage or loan, asking family for help, renting out a room, or accessing pension benefits. Consider selling non-essential assets, using savings, or exploring government benefits you may be entitled to. Compare all options carefully before choosing equity release.

Equity release can affect means-tested benefits like Pension Credit or Council Tax Support, as the cash released may be considered savings. However, it can reduce your estate for inheritance tax purposes. The money released is tax-free, but interest on lifetime mortgages compounds over time. Seek professional advice to understand the full implications for your specific situation.

The No Negative Equity Guarantee is a protection offered by all Equity Release Council members. It guarantees that you (or your estate) will never owe more than the value of your home when it's sold, even if the debt grows larger than the property value due to compound interest. This means your family will never have to pay any shortfall from their own money. This guarantee is a fundamental protection in UK equity release products.

With a lifetime mortgage, interest is added to your loan balance each year and then earns interest itself (compound interest). For example, if you release £50,000 at 5% interest, after 10 years you'd owe approximately £81,445, after 20 years £132,665, and after 30 years £216,097. The debt roughly doubles every 14-15 years at typical rates. This is why it's crucial to understand the long-term impact, especially if you're younger (55-65) and may live in your home for 25-30+ years.

Many modern lifetime mortgages allow voluntary repayments, typically up to 10% of the initial loan amount per year without penalty. Some plans allow you to pay the interest monthly to prevent the debt from growing. Making regular repayments can significantly reduce the final debt and preserve more inheritance. However, not all plans offer this flexibility, so check the specific terms. Early repayment charges may apply if you exceed the allowed repayment amount or want to repay the full loan early.

Most Equity Release Council products are portable, meaning you can transfer the plan to a new property if it meets the lender's criteria (minimum value, acceptable property type, etc.). However, if the new property doesn't qualify or is worth significantly less, you may need to repay some or all of the loan, which could trigger early repayment charges (ERCs). ERCs typically reduce over time and may be waived in certain circumstances like moving into long-term care. Always check portability terms before taking equity release.

A drawdown lifetime mortgage allows you to take an initial lump sum and leave the rest in a reserve facility to access later as needed. You only pay interest on the money you've actually withdrawn, not the full approved amount. This can significantly reduce the total interest paid over time. For example, if approved for £100,000 but only take £40,000 initially, you only pay interest on £40,000 until you draw more. This is ideal if you don't need all the money immediately or want to preserve more equity for inheritance.

Enhanced or impaired life plans offer higher release amounts (or better rates) if you have certain health conditions or lifestyle factors that may reduce life expectancy, such as diabetes, high blood pressure, heart conditions, or being a smoker. The lender calculates that the loan will be repaid sooner, so they can offer more favorable terms. You might release an additional 5-15% of your property value compared to standard rates. A medical assessment or questionnaire is usually required to qualify for enhanced rates.

Typical costs include: arrangement fee (£0-£2,000), valuation fee (£200-£500), legal fees (£500-£1,500), financial advice fee (£1,500-£3,000 or percentage of loan), and ongoing interest charges (typically 4-7% per year). Total upfront costs usually range from £2,500-£5,000. Some lenders allow you to add these costs to the loan, but this increases the total debt. Always get a full breakdown of all costs before proceeding and factor them into your decision.

Downsizing can be a better option if you're willing to move to a smaller or less expensive property. Benefits include: no compound interest, no ongoing debt, potentially lower running costs, and preserving full inheritance. However, downsizing has costs too: estate agent fees (1-3%), stamp duty (if new property over £250,000), removal costs, and emotional impact of leaving your home. Compare the net cash from downsizing (after all costs) versus equity release. Downsizing works best if you can release £50,000+ and are comfortable moving.