15th Jan 2024
Later life borrowing
By Ashley Shepherd
The amount of equity you can release from your home depends on several factors but typically ranges from 20% to 50%. Age has a big part to play as the older you are, the more you can borrow but poor health could increase the size of your loan if you are closer to the minimum age of 55.
Let me explain why.
What impacts the amount of equity I can release?
A lender needs to assess three core things in order to decide how much equity they will allow you to release: your age, the state of your health and your property. Basically, they want to understand the risk, be assured that the property will sell when the time comes and gauge how long it will be until the loan is repaid.
In simple terms, the greater the risk to the lender, the less they will allow you to borrow.
Here’s a closer look at how these three factors can affect the amount of equity you can get:
Your age – the maximum percentage you can release will be based on the age of the youngest homeowner. Typically, the older you are, the more equity you can release.
Your health – if you have any underlying health conditions, you may qualify for a higher loan to value with medically enhanced equity release. Basically, if a lender thinks you will live a shorter than average life, they will treat you as an older person. This means you will qualify for a higher percentage of equity release.
Your property – the higher the property value, the more you can borrow. Also, some lenders may offer a higher loan to value on houses rather than flats and the property must be of standard construction. In addition, the condition of your property is important to the lender too, as they want to be certain your property will sell to repay the loan.
Some lenders may offer slightly less cash for joint applications versus single applicants. However, I suggest that if you do have a spouse or partner living at the property, you still consider opting for a joint scheme - this why speaking to an adviser and getting advice is so important.
What is the maximum amount of equity I can borrow with a lifetime mortgage?
As of January 2024, the maximum amount of equity you can release from your home is 51% but this is the absolute maximum and not necessarily the actual amount you could release.
How much equity could you release?
Here are some further examples of how much money you could release based on your age and property value. Or for a more accurate figure, try our calculator.
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Examples of how much equity you could release
|
| Property value > |
£150,000 |
£200,000 |
£300,000 |
£400,000 |
£500,000 |
£1,000,000 |
| Over 55 |
£32,250 |
£43,000 |
£64,500 |
£86,000 |
£107,500 |
£215,000 |
| Over 60 |
£39,750 |
£53,000 |
£79,500 |
£106,000 |
£132,500 |
£265,000 |
| Over 65 |
£47,250 |
£63,000 |
£94,500 |
£126,000 |
£157,500 |
£315,000 |
| Over 70 |
£54,750 |
£73,000 |
£109,000 |
£146,000 |
£182,500 |
£365,000 |
| Over 75 |
£62,250 |
£83,000 |
£124,500 |
£166,000 |
£207,500 |
£415,000 |
| Over 80 |
£69,750 |
£93,000 |
£139,500 |
£186,000 |
£232,500 |
£465,000 |
| Up to 84 |
£75,750 |
£101,000
|
£151,500 |
£202,000 |
£252,500 |
£505,000 |
| These figures are a guide, as at 26th July 2023; use the online calculator to obtain a personalised illustration. |
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Can I release more money if I already have equity release?
If you already have equity release but need additional funds, you may still be able to release more money. You would need to check with your current lender and I would also suggest talking to an independent advisor or broker, as they may be able to offer you a better plan.
Be careful though as switching to a new lifetime mortgage might incur early repayment charges, so make sure you understand all the implications first.
You also may want to consider a drawdown lifetime mortgage as this option provides an initial sum of money and holds a pot of cash in reserve that you can use for future borrowing.
Will there be any money left for my family to inherit?
Whether there is any money left in your property to leave as an inheritance will depend on the size of the loan when you die versus the value of your property. The longer the loan is in place, the more you will owe, however you can make repayments against the interest if you want to keep the overall cost down.
The good news is that because of the Equity Release Council’s negative equity guarantee, your estate will never owe more than the value of your property. And if you are keen to leave a legacy for loved ones, you could consider a plan that offers inheritance protection.
Next steps
If you want to see how much equity you could release from your home, try our free calculator. Alternatively, we work in association with equity release specialists Age Partnership, so if you do have any questions, please get in touch using the links below.
Age Partnership compare lifetime mortgage interest rates and products with a selection of the UK’s leading providers. They provide initial advice for free and without obligation. Through their relationships, they have secured preferential lifetime mortgage rates that you may not be able to get elsewhere.