How much equity can I release from my home in 2023? (How your equity is calculated)

The equity in your home is the value minus any mortgage or secured lending you may have. Homeowner's aged 55 or over may be able to release between 23% and 50% of the value of your home using equity release lifetime mortgages.

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How much equity can I borrow from my home?

Updated October 2023

When exploring how much equity you can release from your home, over 55’s homeowners have access to a large range of flexible later life mortgages to enhance your best years with financial security.

Later Life Finance provide equity release mortgage calculators to find the best solution for your needs.

Raising cash from your home can provide the financial freedom to settle existing mortgages and debts, carry out home improvements and to continue enjoying hobbies and the lifestyle you enjoy, whilst creating long lasting memories in your golden years. We provide equity release compound interest calculators and interest payment projections.

With a diverse range of options in the marketplace from a wide range of lenders including Aviva, Legal & General and Liverpool Victoria, the market is increasing with £6 billion of equity released in 2022* as demand grows for unlocking tax-free wealth from property.

Flexible plans now include features such as voluntary interest payments and downsizing protection.

Lenders have different criteria to determine how much cash you can release, which Later Life Finance will help you explore to find the best solution for you.

Equity release can be used for various reasons, from repaying an existing mortgage, supplementing your income, gifting a living inheritance or pay for care needs.

For those keen to explore equity release without passing your personal details on to obtain a calculation, Later Life Finance can help. We are an FCA authorised broker and a member of the equity release council.

As a specialist lifetime mortgage broker we can provide figures, guidance, and answer all your questions without any obligation.

We explore how providers assess different scenarios, what affects the amount of equity you can release, and provide guidance on what to expect when discussing equity release with our advisers.

Let’s get started!

How much equity can I release from my home?

Homeowner’s aged 55 or over may be able to release between 23% and 50% of the value of your home using equity release lifetime mortgages.

The alternative option is a home reversion plan which would raise around 30% of the value of your home.

Later Life Finance provide advice on all equity release schemes to help you understand all your options when understanding how much equity you can release from your home.

Our equity release calculator will help you get started with how much equity you can borrow from your home.

Our experts will help you determine how much equity you have in your home with a free review of all your options.

How to tell how much equity you have in your home

How do you know how much home equity you have?

The equity in your home is the value minus any mortgage or secured lending you may have. For example, if you have a home valued at £300,000 and mortgage of £100,000, this means you have £200,000 of equity in your home.

If you release equity from your home, your existing secured lending will need to be repaid from the equity you are borrowing against the value.

The lender instructs a valuation at the outset, and part of the surveyors checks are to ensure the property is in good condition and repair.

Later Life Finance will help you understand how much equity you have and determine how much equity you can release from your home, the best way to setup a lifetime mortgage, and how to pay the interest to avoid your equity being eroded by compound interest.

What factors impact how much I can release?

Not only age and property value are taken into consideration with lifetime mortgage lending percentages, other options, such as medically enhanced plans are also available.

These factors include:

Your health

if you have any underlying medical conditions and are a smoker, you may qualify for a higher loan to value with medically enhanced equity release plans.

This means you may qualify for a higher percentage due to the reduced life expectancy criteria if you release equity. The more serious the medical condition is, the higher the level of borrowing available to you.

Lifetime mortgage lenders offering medically enhanced plans may offer someone with serious health issues an additional percentage of lending based on their health conditions.

The location of your home

Some lifetime mortgage lenders may offer a higher loan to value on freehold houses rather than leasehold flats, and the property must be of standard construction.

We arrange equity release plans throughout the United Kingdom.

Homeowners in England and Wales have access to all equity release plans available.

If you live in Scotland, there may be a reduction in the range of plans available to you.

There are currently only two lenders who lend on properties in Northern Ireland.

The construction of your home

Your home provides the lifetime mortgage lender with the security for the equity release mortgage to be loaned against it.

The sale proceeds of the property will be the vehicle used to repay the loan in the future, therefore the lender is concerned with the property being safe security for the lending,

The valuation at application stage is carried out to verify the construction type and whether there are any underlying issues such as structural movement.

The construction of your property must be ‘standard construction’ such as brick or poured concrete with a tiled, pitched roof.

Period timber frame properties are considered, along with thatched roof properties and grade 2 listed properties. If you are unsure and need advice, please get in touch for further assistance.

The condition of your home

This is important to the lender as they want to be certain your property will sell to repay the equity plus interest when the plan is repaid at the end of your lifetime.

The lender instructs a valuation at the outset, and part of the surveyors checks are to ensure the property is in good condition and repair.

Joint or single application

Some lenders may offer slightly less for joint applications however if you do have a spouse or partner living at the property, a joint scheme would be logical for long term security in your home, as the equity is only due repayable when the last owner has passed away or gone into long term care.

Lender fees

Most lenders provide a free survey meaning you will not be required to pay a valuation fee in most cases with a lifetime mortgage, unless you are applying for a further advance (which is when you are borrowing on an existing mortgage).

With some equity release lifetime mortgage plans an arrangement fee may apply with the lender. This may be applied with the option to secure a more competitive interest rate.

You are not required to pay the arrangement fee up-front. Most lenders allow you to either deduct the arrangement fee from the loan amount or add it, however if you add this you will be charged interest, therefore it is sensible to deduct the fee to avoid additional interest costs.

Equity release plans with cash-back

Some equity release plans may offer a cash-back. The cash does not attract any interest as it is not added to the mortgage.

Certain lenders offer you a fixed sum regardless of your release amount, and some lenders provide you with a percentage of the amount released. For example, 2% or even 5% extra.

Our calculator provides an estimated lender percentage. Complete for a guide and we will discuss your individual circumstances, priorities and longer term objectives to understand your requirements.

Joint or Single applications

The maximum equity release available is based on the age of the youngest applicant. Some lenders offer lower percentages for joint applications compared to single applications. However a married couple would in most circumstances be better to apply on a joint basis. This is because the plan is only due repayable on last death, or going into long term care.

Circumstances where a single basis lifetime mortgages may be required for a married couple:

Where the spouse’s primary residence is a different property;
Where the youngest applicant is below the age of 55 (the minimum age for equity release plans);
When one spouse is older, and you wish to apply in one name to obtain more money or a lower interest rate, however for the purposes of long term security this option is not preferable. (On sole application basis anyone else residing in the property would need to vacate it in order for the equity release to be repaid).

Equity release schemes and options

The range of options has diversified over the recent years with lenders offering more flexible plans.

Downsizing Protection

Your future plans may change, any plan features need to match your requirements for flexibility.

For a homeowner couple, for example, one of you may wish to downsize if one of you passed away, or whilst you are both still able to do so.

Certain lenders provide ‘downsizing protection’ for this level of flexibility, which avoids an early repayment charge being applied.

Lodgers

All equity release lenders allow other people living with you.

If you have a tenancy agreement in place this may limit the number of plans available to you.

Some lenders insist on a waiver of occupancy form being signed to waive any legal rights and protect your interests, and theirs.

Making Voluntary Payments

Most lenders now allow you to pay voluntary payments.

If you choose to make repayments, this will help reduce the effect of the interest on the equity borrowed. Most plans allow interest payments to be made to help reduce the interest accruing.

There are various plan features to explore which can be discussed to help you decide which solution is your ‘best fit’. The benefit of having such a wide range of plans available provides you with flexibility for the future.

The type of property. House, flat or bungalow?

Some lifetime mortgage lenders may offer a higher loan to value on freehold houses rather than leasehold flats, and the property must be of standard construction.

It’s important the solution for your needs is best outcome for you, not just now but for the future.

Our free equity release calculator provides instant results. In order to provide you with an accurate calculation your age and estimated property value are required.

Any personal details provided are confidential and not shared with third parties.

Our expert equity release advisers will provide detailed interest projections and illustrations for your consideration.

Your adviser will check if an equity release product is suitable and explain how much equity you are eligible for and compare the market to ensure you secure the best solution.

They will also explain how the lifetime mortgage interest may affect the remaining equity in your home and they should recommend you discuss your plans with any family members, if appropriate.

To find out how much equity you can release, request a call back for a detailed illustration based on the estimated value of your home and how much equity you are considering raising.

Lifetime mortgage FAQs

What percentage can I borrow on a lifetime mortgage?

The amount you can release on a lifetime mortgage is usually between 20% and 50% of the home's valuation. This is based on the age of the youngest homeowner and the property type.

Can you borrow more on a lifetime mortgage?

If you need to raise more money and have no remaining Drawdown (reserve) Facility, you may be able to take a Further Advance from your lifetime mortgage. This is additional borrowing on top of your existing lifetime mortgage and is subject to the valuation of your home and the balance on your lifetime mortgage.

Can I move home with a lifetime mortgage?

Equity release companies who adhere to the Equity Release Council codes of conduct offer the option to transfer your lifetime mortgage to a new property if you decide to move. However, certain conditions must be met for the new property to be considered "suitable." A suitable property refers to one that is deemed marketable by the equity release company in the future. For instance, if the new property is located in a flood-prone area, the transfer of the lifetime mortgage may not be permitted. In the case of downsizing to a property of lesser value, you might be required to repay a portion of your lifetime mortgage to facilitate the transfer.

How much do you pay back on a lifetime mortgage?

In the case of a lifetime mortgage, you generally do not need to make monthly repayments since the loan, along with the accumulated interest, is settled when your home is eventually sold. Your lifetime mortgage adviser will provide detailed projections of how much you will pay back based on whether you opt to make payments or not.

What happens when you die shortly after taking out a lifetime mortgage?

In the event of you passing away shortly after obtaining a lifetime mortgage, the interest accrued would not have significantly accumulated, resulting in a smaller growth of the debt. If no other homeowner is listed on the lifetime mortgage, the lender requires the mortgage to be settled within 12 months of you passing away. The executors of your will sell the property and utilise the proceeds to settle the debt. The beneficiaries of your estate may opt pay off the debt using cash or a new mortgage and retain ownership of the property. This will depend on factors including your wishes set out in your will, and on whether the property is to be retained or sold, with any remaining equity divided by your beneficiaries.

Can you end up owing more than your home is worth with a lifetime mortgage?

Equity release lenders who are a member of the Equity Release Council provide a no-negative equity guarantee. This ensures you will never be required to repay more than the proceeds from the sale of your home to settle the debt. In other words, the lender cannot pursue you for any shortfall between the debt amount and the sale proceeds. This protection is made possible by the no negative equity guarantee, which is upheld by all members of the Equity Release Council. According to this guarantee, the lender is strictly limited to requesting only 100% of the sale proceeds as repayment. They are not permitted to seek additional payment from you, your estate, or your estate beneficiaries.

What is a typical rate for a lifetime mortgage?

A typical rate for a lifetime mortgage typically falls between 5.9% and 7%. That said, your rate may be different depending on factors like your loan-to-value ratio and the features included in your plan. It’s important to compare the features of different plans to find the one that best fits your needs.

What are the disadvantages of a lifetime mortgage?

Lifetime mortgages come with a few risks, such as the possibility of owing more than the value of your home due to accumulated interest. They also require monthly fees and can significantly reduce the amount of inheritance you can pass on to family members. Ultimately, it’s important to consider all of these factors when deciding if a lifetime mortgage is the right choice for you.

How do lifetime mortgage interest rates work?

Lifetime mortgage interest rates are typically based on your age, the amount of money you need to borrow, and the value of your property. Generally speaking, the older you are and the less you borrow, the lower the rate you can expect. Drawdown lifetime mortgages have interest rates set at the time of further borrowing, whereas the initial lump sum is determined at the time of arranging the plan. So be sure to research what’s out there before making a decision.

Can I pay off a lifetime mortgage early?

Yes, you can pay off a lifetime mortgage early, but there may be fees associated with doing so. Providers have varying levels of early repayment charges which your equity release adviser will discuss with you to ensure you have access to all your options and understand the features and charges. It is best to check with your provider before you decide on the repayment plan.

What are the different types of lifetime mortgage?

Lifetime mortgages come in several forms, including lump sum, drawdown and interest-only plans. Each offers different rates and repayment arrangements, so your adviser can tailor the mortgage to meet your needs. Later Life Finance provides access to the whole lifetime mortgage market. We will explain the features, costs and points to consider of each option. This will help you make a balanced decision on the right solution for you.

Can equity release be used to pay off an interest-only mortgage?

You can repay an interest-only mortgage with an equity release plan. Lifetime mortgages are the most popular form of equity release and allow optional repayments of interest charges, if you wish. Since monthly repayments are voluntary with a lifetime mortgage, your home is not at risk of repossession if you do not maintain monthly payments.Therefore these plans can be more suitable into retirement years.

what is an interest only lifetime mortgage?

An interest-only lifetime mortgage is a type of equity release plan where you can pay the interest off on a monthly basis. This avoids compound interest being added which stops the loan from increasing. This type of mortgage is popular for homeowners who want to maintain equity in the home for inheritance or downsizing purposes.