Important things to know about equity release:
- Equity release is a loan which increases with compound interest. It’s repaid when you die or move into long-term care. It may reduce the amount of inheritance you leave and affect your future financial options, including means-tested benefits
- Homeowner must be over 55 and UK resident (excl. NI)
- The amount released will depend on your age and property value
- Equity release requires paying off any existing mortgage
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Equity release isn't right for everyone, and there are a number of alternatives to equity release that may better meet your needs
Who is the equity release calculator for?
You can only apply for a lifetime mortgage if you’re aged 55 or over. If you’re applying as a couple, both you and your partner must be aged 55 or over.
You will need to enter the details of the youngest applicant into the calculator. You’ll also need to own a property in the UK worth at least £99,000.
How much equity could you release?
The amount of equity you can release mainly depends on your age and house value. Because house prices have risen over the years, the equity you have in yours could be significant.
Most people release between 20% and 60% of the equity in their home – typically around £10,000-£100,000.
For example, if your home is worth £250,000 and you released 30% of your equity, you would receive £75,000. If you had an outstanding mortgage of £25,000 then you would have to pay it off, but would still have £50,000 to spend how you wish.
You can use SunLife’s equity release calculator free of charge, and it will give you an estimate on how much you could release.
Could equity release leave my family in debt?
If your equity release provider follows Equity Release Council standards, there's no need to worry. This guarantees the amount owed will never be greater than the value of your house, so you can’t leave your family in debt with equity release (even if your house falls in value). This is called ‘no negative equity guarantee’.
However, a lifetime mortgage may result in limited or no property equity remaining, and will reduce your financial options in the future.
The debt, plus the compound interest will be repaid from the sale of your home, either when you pass away or move into long-term care.
Be aware that equity release will reduce the value of your estate and may also affect your entitlement to means-tested benefits.
Getting help and advice on equity release
Before making a decision about equity release, you'll need to get advice from an expert, qualified adviser. They can compare plans available to you and advise on what type of equity release would best suit you.
Understanding equity release
If you’re thinking about equity release, you’ll need to understand how it works and what it means for you. Have a look at our latest articles – they’re a great place to start.
