If you are considering releasing cash tied up in your property, you may wonder: How Much Equity Can I Access? Understanding the potential amount is a crucial step in making an informed and sensible financial decision. The amount you can access largely depends on two crucial factors: the current value of your home and your age. Generally, the older you are and the higher your property’s value, the greater the amount you can release.
Typically, you can access between 20% and 60% of your property’s total market value through equity release. However, these figures can vary based on your specific circumstances, individual lender criteria, and the plan you choose. It is essential to recognise that lenders conduct thorough assessments before determining the amount of equity you can release. The type, condition, and location of your property also play a vital role in determining the final figure available to you. If you have any existing mortgage or secured loans, these will need to be repaid first using the released funds.
Providers may also consider factors such as your health and lifestyle, which could influence the amount you are offered.
It is not just about releasing the highest possible sum; careful consideration should be given to the longer-term consequences. Releasing equity can reduce the value of your estate and may impact the inheritance you wish to leave to your family. Choosing the right plan requires understanding how different options work and the specific conditions that apply to each lender’s offer. Let’s explore in more detail what influences the amount and types of equity release available, as well as other important considerations.
What Influences the Amount of Equity You Can Release?
When a lender assesses how much you could release, they consider several important aspects:
1. Property Eligibility
Not every home automatically qualifies for equity release.
Lenders must be confident that your property will sell easily on the open market in future.
Factors such as construction type, property condition, and listed status could impact eligibility.
Unique or non-standard properties may face stricter criteria.
2. Current Property Value
A professional, independent valuation will determine your property’s current market value.
The higher the valuation, the more equity you can release.
3. Age and Health
Age plays a significant role — the older you are, the more you can usually release.
For joint applications, the younger applicant’s age will apply.
Some lenders also offer enhanced plans for those with qualifying health conditions or lifestyle factors.
Other important considerations include:
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Outstanding debt: Any existing mortgage or secured loan must be repaid, often using part of the released funds.
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Plan type: Some plans allow regular interest payments. Others add interest to the balance, increasing the total loan through compound interest.
Important to Know|The Impact of Compound Interest
With lifetime mortgages, interest typically compounds. This means you are charged interest on the original loan and any accumulated interest.
The longer your plan runs, the more your total debt will increase. However, if your provider is a member of the Equity Release Council, a no-negative equity guarantee will apply.
This guarantee ensures you will never owe more than your property’s eventual sale price. Even so, releasing equity could reduce or eliminate the remaining value in your home.
This could impact future financial flexibility and reduce any inheritance left behind.
Maximum Equity Release |How Much Equity Can I Access?
Most lenders will allow you to release up to 60% of your property’s value.
However, the actual amount available depends mainly on your age and your property’s value.
Example:
| Your Age | £100,000 Property | £200,000 Property | £300,000 Property | £400,000 Property | £500,000 Property |
|---|---|---|---|---|---|
| 55 | £17,500 | £35,000 | £52,500 | £70,000 | £87,500 |
| 65 | £27,500 | £55,000 | £82,500 | £110,000 | £137,000 |
| 75 | £38,000 | £76,000 | £114,000 | £152,000 | £190,000 |
| 84 | £47,000 | £94,000 | £141,000 | £188,000 | £235,000 |
These figures are illustrative only, based on a typical lifetime mortgage as of August 2024. Actual offers will differ.
For a more personalised figure, using an equity release calculator can give a clearer estimate based on your individual circumstances.
Already Have an Equity Release Plan? Here’s How Much You Could Access More
If you already have an equity release plan, you might still be able to access more funds.
This can happen in a few ways:
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Rebroking: Your adviser could help you find a better deal with improved terms.
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Further Advance: Some providers allow you to request extra borrowing under your existing plan.
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Drawdown Facility: If you initially borrowed less than available, you might access a pre-agreed reserve later.
However, borrowing more may involve new conditions, extra fees, and different interest rates.
You should discuss all options carefully with your adviser before proceeding.
How Much Equity Can I Access?| Alternatives to Equity Release
Equity release is not the only way to access funds from your property.
Other options could include:
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Downsizing: Selling your current property and moving to a less expensive one.
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Relocating: Moving to a cheaper area.
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Utilising savings or investments: Using your own financial resources, if available.
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Family assistance: Receiving financial help from relatives, if possible.
Your financial adviser will cover these alternatives in full during the advice process.
This ensures you understand all available choices before deciding.
It is often wise to involve your family, as equity release can impact the inheritance you leave behind.
How Much Equity Can I Access? |Key Points to Remember
Equity release can be an effective way to access funds tied up in your property. However, it is important to understand that it significantly affects your future financial position.
The amount you can release depends mainly on your property’s value and your age. Generally, you can expect to release between 20% and 60% of the value.
It is essential to seek professional advice, consider all options, and involve your family in discussions. With the right advice, equity release could help you enjoy greater financial freedom in later years.
Thinking about releasing equity?
Richard Jeremiah-Clarke, a member of the Equity Release Council, is available to help. Please feel free to contact Richard by clicking the link below.
Thank you for reading our “How Much Equity Can I Access? | What You Need to Know” publication. Stay “Connect“-ed for more updates soon!
