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.
Get your free calculation..
Table of Contents
How much equity can I borrow from my home?
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
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?
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.