How Much Equity Release Can You get?

If you're wondering, how much equity release can you get? Remember that equity release differs from a regular mortgage because there's no affordability assessment. It can be confusing to figure out how much you can borrow, but it mainly depends on two factors: your age and property value. The older you are and the more valuable your property is, the more you can borrow. Most equity release providers allow you to borrow up to 60% of your property's value, but if the youngest borrower is only 55, you won't be able to borrow as much.

In this insight, we'll provide details on how much equity release you can get based on your circumstances and the lender's criteria.

Key takeaways

• Equity release is different from a regular mortgage because there's no affordability assessment. To determine how much you can borrow, the two main factors are your age and property value.
• With a lifetime mortgage, the amount of equity you can release is calculated as a percentage of your property value determined by your age. 
• Most lenders allow you to borrow up to 60% of your property value, but the younger the borrower, the less they can borrow. Other factors that can impact the amount you can borrow include your health, outstanding debts, and whether you choose a lifetime mortgage or a home reversion plan.
• An equity release adviser can compare lenders and provide an accurate figure of how much you could borrow.

How Much Equity Release Can You Get?

If you are considering a Lifetime Mortgage. To determine the amount of equity you can release from your property, lenders use a percentage of its value based on your age. For instance, if you're 55 years old, you can usually borrow up to 21.5% of your property's worth. If you're applying jointly, the lender will consider the age of the youngest homeowner.

Let's say you are 55 and have a property valued at £300,000. With a lifetime mortgage, you can release a maximum of £64,500.

If you are younger than 55, you will not be eligible for equity release. Consider your equity release options for under 55. Or, if you are unsure whether equity release is right for you, consider the equity release alternatives.

When does the equity release you can borrow increase?

As the youngest borrower celebrates each birthday, they may be able to borrow an additional 1% of the property's value on average. This means that the older the youngest borrower gets, the more they may be able to borrow against the property.

How can you calculate how much equity release you can get?

Different lenders may have varying criteria when it comes to calculating equity release. As an example, one possible formula is (youngest borrower's age - 54) + 21.5. However, to make things simpler, here's an illustration of what this could mean for you:

What impacts how much equity you can release with equity release?

We already know age and property value are the two most important factors, but there are other factors that can make a difference to the amount you borrow. 

Age

The younger you are, the less you can borrow. This is because you are expected to have longer left to live, if you live another 30 or 40 years, it will take the lender longer to recoup their investment than someone who is already in their eighties. 

Health

Your health situation may also be considered, since someone with a medically underwritten plan may be able to release more. If you are unwell, it could result in a shorter life expectancy, as the lender will anticipate the equity release being paid back sooner they may lend you more. 

Outstanding Debts

Unsecured and secured debts must be taken into account.  If you have an outstanding mortgage or other secured loans, the lender may require them to be paid off for the equity release plan to proceed. 

How much Equity can I release with a Home Reversion plan?

A home reversion plan allows you to release up to 100% of your property value, but the amount you receive may be significantly lower than the market value. This is because the lender will offer you a reduced value to release. Keep in mind that with a home reversion plan, you're essentially selling your home and becoming a tenant. Be aware if you choose to use a home reversion calculator, it may not be accurate in providing how much you can borrow.

Advice On Equity Release

If you are unsure of how much equity release you can get, it's a good idea to seek advice from an equity release adviser. They will be able to compare lenders and provide an accurate figure of how much you could borrow. 

If you are unsure where to start with getting advice, complete the Sunny Fact Find for equity release. The answers you provide help us to find the best-suited adviser for your needs. Your adviser then contacts you for a no-obligation chat on how they can help. You decide how to proceed.

Equity Release Calculator

If you're still looking for the answer to the question, how much equity release can you get? We have put together an Equity Release Calculator which can be used to provide a guideline on how much you can borrow based on your age and property value. 

FAQs