In this brief blog, we will cover the question which many potential equity release borrowers often ask themselves, “how much equity release can I get”
Once you start thinking of equity release you may want to know how much equity you can release. In the first instance to be eligible for any equity release product you will have to be at least 55 years of age and have some equity in your property which can be released.
Different equity release providers will have their own criteria for how much equity you will need to have in your property before they will consider offering you their equity release product.
Different equity release providers will also have their own criteria for how much equity release they will offer.
equity release can be a good way to get access to funds for later life. You can use the money you ger from an equity release provider to do whatever you want to do without any restrictions.
The equity release balance is repaid to the equity release provider when you die or move into long term care.
How much equity release you may be able to get will be based on your property and your personal circumstances.
Different equity release providers also have their own criteria on the max amount of Loan to value they will offer you on their equity release provider. This may be a key consideration for you when considering which equity release provider to choose from.
If you are working with an equity release advisor they will be able to advise you on the best equity release provider for your own circumstances.
The average equity release being given to borrowers these days is around 35% but there are some equity release providers that will provide up to 50% of the value of your property as an equity release.
Most equity release providers will charge you a fee for the equity release and this could be as much as 5%.
You may want to consider this when looking at equity release providers.
The amount of equity release you will be able to get will have to do with your property. Some equity release providers will insist the property value is at least £70,000 and you may have other equity release providers with higher property minimum values and those who cap the value of the property at a maximum rate.
The equity in your property
The amount of equity you have in your property will also be a significant factor in how much equity you can actually release. Some equity release providers will require you have a minimum amount of equity in your home before they will release equity to you.
The property type
If you have a property with non-standard construction then you may find that the equity release providers available to you are very limited.
Your age will also play a big part in how much equity release you can get. The older you get the more equity release you will be able to get. It’s really that simple.
Your personal circumstances
Your personal circumstances also play a big role in how much equity release you can get. If you are terminally ill or likely to die soon you may find that equity release provider is more willing to offer you an increased amount of equity release.
How do I release equity from my house?
To release money from your house you will need to be at least 55 years old and have a property which is unmortgaged or mortgaged with sufficient equity in it for you to potentially release.
With an equity release product there are no monthly mortgage repayments(except you choose to have them) and the balance owed is paid off when you die or move into a care home.
There are a variety of equity release products which you can use to release equity from your house. They include:
Home reversion plans
Retirement interest-only mortgages
To release equity from your house you should contact an equity release adviser who will be able to compare your equity release options and let you know what the most suitable way for you to release equity from your house is.
As part of the equity release process, the property will be valued by the equity release provider and you will need a solicitor to ensure you understand the terms of the agreement you are going into.
What can you do with money released from an equity release provider?
You can do as you like with the money released from an equity release provider.
Homeowners are releasing over £1.5bn from their homes in each half of the year and these funds are used to go on holiday, to make investments, to give their family members a mortgage deposit and any other things they may wish to do.
Can you have equity release if you have a mortgage?
Yes, you can have an equity release even if your property is mortgaged. The equity release provider will simply get your mortgage redemption statement and pay off the balance of your mortgage.
The balance of your mortgage which is paid off will be added to part of the equity which you have released.
Can I leave an inheritance to my family with equity release?
Yes, you can leave money to your family even if you have an equity release product. You can ringfence some of your equity to pass down to your family when you die. Most equity release providers are now part of the equity release members council which all have a no negative equity guarantee. This means that the amount you owe on your equity release product will never be more than your property is worth.
Regulations laid down by the governing body: the equity release Council have capped the maximum amount of capital you can release, and some lenders will insist on minimum loan amounts to ensure it’s worth their while – read on to find out what the maximum and minimum amount of funds you could access via equity release are.
What is the maximum amount of equity release I can take?
The equity release council has guidelines which prevent any of its members from offering an equity release of more than50% of the value of their homes. This means the maximum equity you may be able to release will be 50% regardless of how eligible you are.
Most equity release providers will provide you with a loan to value of between 20 and 50%.
What is the minimum amount of equity release I can take?
The minim amount of equity release you may be able to get will be around £10,00 but this may be higher with some equity release providers and can be as high as £30,000.
The minimum property price you will need for an equity release is £70,000.
How much equity do you need to release?
The amount of equity you may need to release will be based around your needs. Some equity release providers will let you have a drawdown mortgage equity release which allows you to take money out when you want.
Is equity release a safe option?
equity release could be considered a safe option when a no negative equity guarantee is in place. You should be aware that equity release products do work with compound interest which can make them very expensive.
Is equity releasea good idea?
Whether equity release is a good idea or not will depend mostly on your personal circumstances. You should contact an equity release advisor who may be able to provide you with further advice.
What is the downside to equity release?
The downside to equity release is that it may end up costing you so much due to compound interest.
equity release could also mean that you don’t have any inheritance to pass on to your kids.
equity release could also make you ineligible for means-tested benefits. If you claim means-tested benefits you may want to seek independent financial advice.
Yes, you may be able to pay back your equity release by redeeming your equity release product before you die or move into a care home by paying any outstanding balance. There may be an early repayment charge associated with doing this and it could be significant.
How much equity do you have in your property?
To calculate how much equity you have in your property you should find the value of your property and then subtract andy debts owed on your property such as your mortgage. Whatever is left is the equity you have in your property.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.