When considering equity release, a common question is, “How much can I borrow from my property’s value?”
Typically, homeowners can release between 20% and 60% of their property’s worth. This depends on factors like age, health, and home value. Lifetime Mortgages are the most popular form of equity release. They are loans secured against your home and offer flexibility in releasing funds.
For context, by the end of 2023, new LTM customers, on average, released £79,484 from their properties. These mortgages provide access to cash without requiring monthly repayments, as the loan is repaid when the property is sold.
Understanding your options is crucial before making decisions. Equity release isn’t suitable for everyone, so seeking advice from a qualified adviser is essential.
Factors That Influence the Amount of Equity You Can Release
Several elements determine how much equity you could unlock from your property. These include:
1. Your Age
Your age significantly impacts the amount of equity you can release. Older homeowners often qualify for higher amounts.
2. Property Value
The market value of your property is a key factor. Higher-value homes may enable larger equity releases.
3. Property Type and Location
Certain property types or locations may restrict lending options. Homes with unusual features, such as thatched roofs or those near busy pubs, may not qualify with some lenders. Additionally, homes on flood plains or retirement properties often face stricter criteria.
4. Provider-Specific Restrictions
Each lender has unique rules about eligible properties. For instance, some providers avoid properties with restricted leases or retirement housing. It’s vital to review these conditions early in the process.
5. Affordability Checks (For Some Products)
Affordability assessments might apply for certain lifetime mortgages, like a Payment Term Lifetime Mortgage. These ensure you can manage any repayment obligations tied to the product.
Your financial adviser will help identify potential issues and recommend suitable solutions. Always consult a professional for tailored advice based on your unique circumstances.
Can I Increase the Equity I Release?
The amount of equity you can release depends on the type of equity release plan you choose. Certain plans offer a drawdown facility, allowing smaller withdrawals up to a pre-agreed limit over time. Each withdrawal adds to the total amount owed to your lender, with borrowing limits based on specific eligibility factors.
When withdrawing funds, your lender will set the interest rate for each payment separately. This rate may differ from the rate applied to earlier withdrawals. It is important to consider the following:
- If you do not make payments to cover the interest, the amount owed could grow rapidly.
- Any money withdrawn may impact the means-tested benefits you currently receive.
By understanding these aspects, you can make informed decisions about your equity release plan.
What Should I Do Next?
Start by understanding how much equity release you may be eligible for. Use our Equity Release Calculator for an instant estimate. This simple tool helps you understand your potential options in just a few clicks.
Next, speak with a qualified financial adviser. Equity release, including Lifetime Mortgages (LTMs), requires professional advice from a regulated expert. If you don’t already have one, visit the Unbiased website to find a trusted adviser near you.
Finally, take time to read through related equity release guides. These articles provide clear and practical information, helping you make informed decisions. You’ll find some of the most useful resources at this page’s bottom.
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