How Much Equity Release Can I Get?

Main guide

How is the amount of equity release calculated?

The amount of equity release you may be able to get is usually based on a combination of your age, property value and the lender?s maximum loan-to-value limits.

A lifetime mortgage lender will look at how much they are prepared to lend against your property. This is usually expressed as a percentage of the property value.

For example, a lender may allow a certain percentage of the property value to be borrowed, depending on the applicant?s age and product criteria. The percentage available can vary between lenders and products.

This is why two homeowners with similar properties may not receive the same result. Age, property type, health, existing borrowing and lender rules can all affect the outcome.

Why does age affect how much you can release?

Age is one of the biggest factors in equity release.

In general, older applicants may be able to release a higher percentage of their property value. This is because the lender expects the loan to run for a shorter period than it might for a younger applicant.

Most lifetime mortgage products are available from age 55, but the amount available at 55 may be lower than for someone in their 70s or 80s.

For joint applications, lenders usually base the calculation on the youngest homeowner. This is because the plan is normally expected to run until the last borrower dies or moves permanently into long-term care.

For example, if one homeowner is 72 and the other is 58, the lender will usually calculate the maximum release using age 58, not age 72.

This is important for couples with an age gap, as the younger borrower can significantly affect the amount available.

How does property value affect the amount?

Your property value is another major factor.

The higher the property value, the larger the potential borrowing may be, subject to lender limits. However, the property value used by the lender is not simply what you hope the property is worth. It will normally be based on a valuation accepted by the lender.

A property listed online for one figure may be valued differently by a lender?s valuer. The condition, location, construction type, saleability and comparable local sales may all influence the valuation.

This means calculator estimates can change after valuation. If the final valuation is lower than expected, the amount available may also be lower.

What happens if you already have a mortgage?

If you already have a mortgage secured against your home, it will usually need to be repaid when the lifetime mortgage completes.

This is one of the most important points to understand. The amount a calculator shows may be the gross amount available, but the usable amount after repaying an existing mortgage may be lower.

For example, if a homeowner is able to release £80,000 but has an existing mortgage of £45,000, the existing mortgage would usually need to be cleared first. That could leave £35,000 before any fees or other costs.

This example is only illustrative. It is not a quote or a guide to what you personally could release.

If your main reason for equity release is to repay a mortgage, the adviser should check whether this is suitable and whether alternatives such as remortgaging, a retirement interest-only mortgage, downsizing or family support should be considered.

You can read more about how a lifetime mortgage works here: How Does a Lifetime Mortgage Work?

What property criteria do lenders check?

The property itself matters. A lender will usually need the home to meet its criteria before offering a lifetime mortgage.

Things that may be checked include:

• property value
• construction type
• condition
• location
• tenure
• lease length if leasehold
• property type
• whether the home is the main residence
• whether there are structural concerns
• whether there are commercial or unusual features
• whether the property is easily saleable

Some properties may be acceptable to one lender but not another. Others may reduce the amount available or require further checks.

For example, flats, leasehold properties, non-standard construction, properties with land, listed buildings or homes with certain structural issues may need closer review.

This does not automatically mean equity release is unavailable, but it may affect lender choice and the final amount.

Can health or lifestyle affect how much you can release?

Some lifetime mortgage providers may consider health and lifestyle factors when calculating the amount available.

This is sometimes referred to as enhanced equity release or an enhanced lifetime mortgage. It may apply where health or lifestyle factors suggest the plan may run for a shorter period.

Factors might include certain medical conditions, smoking history or other health information, depending on the lender?s criteria.

However, this is not guaranteed. It depends on the lender, the product and the details provided. It should not be assumed that health conditions will automatically increase the amount available.

An adviser can explain whether enhanced terms may be relevant and whether it is appropriate to explore them.

How does drawdown affect the amount?

Some lifetime mortgages offer a drawdown facility. This means you can take an initial amount and keep a reserve available for later.

The maximum reserve may be based on the lender?s calculation, but you do not have to take it all immediately.

This can be helpful because interest is usually charged only on the money once it has been released, not on the unused reserve. If you do not need all the money at the start, drawdown may reduce the amount on which interest begins building straight away.

For example, a homeowner may need £30,000 now for home improvements but want another £20,000 available later. A drawdown plan may allow the initial release now and a reserve for later, subject to lender terms.

Future withdrawals are not always guaranteed in every situation. They may depend on product rules, lender criteria and the reserve facility remaining available.

Why calculator results are only a guide

An equity release calculator can be useful, but it cannot give personal advice or confirm the final amount a lender will offer.

A calculator may not fully assess:

• property condition
• construction type
• lease details
• existing mortgage repayment
• health or lifestyle factors
• benefits position
• estate planning
• future care needs
• lender-specific criteria
• whether equity release is suitable

It may show a broad estimate based on limited information. The actual amount could be higher or lower after advice, valuation and lender assessment.

Use a calculator as a starting point, not as a decision-making tool.

You can start here: Equity Release Calculator

Should you release the maximum amount?

Not necessarily.

The maximum available amount may not be the most suitable amount to release. Borrowing more than you need can increase the long-term cost and reduce the value left in your estate.

A better question is not simply:

?How much can I get??

It is:

?How much do I need, and what is the most suitable way to release it??

For some homeowners, a smaller release or drawdown structure may be more appropriate than taking the maximum upfront. For others, equity release may not be the best option at all.

This is why advice should focus on your objective, not just the maximum figure.

What if you cannot release enough?

Sometimes the amount available is not enough to meet the homeowner?s objective.

This can happen if:

• the applicant is younger
• the property value is lower than expected
• the existing mortgage is too high
• the property does not meet criteria
• lender loan-to-value limits are lower than expected
• fees or repayment costs reduce the usable amount

If you cannot release enough, you should not assume equity release is the answer. Alternatives may need to be reviewed.

These could include:

• downsizing
• remortgaging
• a retirement interest-only mortgage
• family support
• using savings
• reducing the amount needed
• delaying the decision
• debt or budgeting advice where relevant

Read more here: Alternatives to Equity Release

How benefits and inheritance fit into the decision

The amount available should also be considered alongside benefits and inheritance.

Releasing money may affect entitlement to means-tested benefits, depending on how much is released, how it is held and how it is used. This needs careful checking before proceeding.

Equity release can also reduce the value of your estate, which may reduce inheritance. The more you borrow, the greater the potential impact, especially if interest rolls up over time.

Related guides:

• Equity Release and Benefits
• Equity Release and Inheritance
• Equity Release Interest Rates and Costs

Questions to ask before using equity release

Before deciding, ask:

• How much do I actually need?
• Do I need the money now or in stages?
• How much of the release would repay existing borrowing?
• What would be left after repaying my current mortgage?
• Could I use a smaller release?
• Could drawdown reduce the long-term cost?
• How would this affect inheritance?
• Could benefits be affected?
• What alternatives have been considered?
• What happens if I want to move later?

A suitable recommendation should answer these questions clearly and personally.