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Rough maximum loan-to-values rise with age (about 24% at 55 to over 50% by 80); lenders vary and health can increase them. Compound roll-up is the defining feature: the debt grows exponentially unless interest is paid. Equity Release Council standards guarantee no negative equity and the right to remain. Regulated advice is mandatory before taking a plan. Not financial advice.
What The Equity Release Calculator Works Out
- Maximum release: the home's value multiplied by an age-based loan-to-value, roughly 24% at 55 rising by about 1.2 points a year to a little over 50% by 80. A 70-year-old in a GBP 300,000 home can typically release around GBP 126,000. The gradient is actuarial: older borrowers give compound interest less time to work, and impaired health raises limits for the same reason.
- Debt if interest rolls up: the loan compounded at the rate for 10, 15 and 20 years with no repayments, which is how a lifetime mortgage works by default. At 6.5% that GBP 126,000 becomes about GBP 237,000 in a decade and GBP 445,000 in two.
- Doubling time: how long the debt takes to double at the chosen rate, roughly 11 years at 6.5%. Lifetime mortgage rates are fixed for life, so this number is locked in on day one.
- Amount to release (advanced): model a smaller lump sum than the maximum. Releasing less, later, or in drawdown tranches beats a maximum lump sum for most purposes, because interest only accrues on what is drawn.
- Fees added to the loan (advanced): arrangement, valuation, legal and advice fees commonly total GBP 1,500 to GBP 3,000 and, if added to the loan rather than paid up front, compound alongside it.
- Voluntary interest payments (advanced): Equity Release Council standards make penalty-free voluntary payments standard. Paying the full monthly interest freezes the debt; paying part of it slows the roll-up, and the card shows how much less is owed at the end of the projection.
- House price growth and equity left (advanced): grows the home's value at your assumption and shows what remains for the estate after the debt is settled. The no-negative-equity guarantee means the estate never owes more than the sale proceeds, so equity can reach zero but never go below it.
- Year-by-year table (advanced): debt, home value and remaining equity for each of the first ten years and every fifth year after that, up to your chosen horizon.
- Outside the numbers: released cash can end means-tested benefits and reduces what social care means-testing later finds; downsizing releases equity at 0% and deserves the honest comparison advisers are obliged to make. Regulated advice is legally required, ERC membership is the baseline filter, and early repayment charges reward reading before signing.
Further reading: MoneyHelper: equity release.