If you have been seriously considering taking out an equity release plan, the most important question to come to mind will be ‘what is the maximum equity release available?’
Obviously, you may not want to secure everything you can get, however, a useful equity release calculator can advise upto the maximum available. For instance with a drawdown equity release plan, it would be helpful if you knew the maximum, as any funds not taken in such a scheme would then be held in a reserve facility for future use.
You will also need to bear in mind that there are certain factors that will be taken into account in order to arrive at the figure that would be released to you in such a plan.
First and foremost, your age will be a very important factor. The younger you are, the less you can expect to have released in an equity release scheme. You would tend to find that the companies that deal in equity release plans add an extra percentage point of LTV (loan-to-value) for each year the applicant gets older.
This is because the relevant company has to estimate how long it is likely to be until they will be able to secure the final equity – i.e. your property. If you take out an equity release mortgage when you are in your late-fifties or early-sixties, you can expect to receive a far lower payout than if you were to have taken out the plan in your eighties, for example. This is purely down to life expectancies which are increasing all the time as people are healthier & more active in their retirement years.
You should also bear in mind, at this stage that the companies dealing in equity release schemes have a minimum age threshold in place and this is generally set at 55 years of age. These would be companies such as Aviva, New Life Mortgages, and Stonehaven. However, some equity release companies such as Just Retirement & LV= impose a higher minimum age of 60 before you can apply.
The next factor that will be taken into account is the actual market value of your property. Again, the higher this is, the more you can expect to receive in your payout. There are minimum value thresholds in place here as well which is £60,000. However, most companies impose higher minimum values & £75,000 or £100,000 isn’t uncommon.
If you are looking to take out an equity release plan in a joint application, the youngest applicant’s age will be the deciding factor as to the amount of money that will be released in the payout. This is because the company must wait for both applicants to either pass away or move into permanent residential care and the youngest applicant will be the most likely to vacate the property last in either capacity. Also, as stated earlier, the youngest person in the couple must also be over the age of 55.
There are convenient equity release calculators on many websites that will give you a very good idea of the amount of money to be expected as a payout when you take out such a plan. All you need do is simply complete an online enquiry form and these will return the maximum value that may be available to you in an equity release scheme. If you are happy with this figure, you may then go ahead and start the ball rolling with the relevant company; there is also a facility to discuss equity release mortgages in more detail with a qualified equity release adviser, if you have further questions that require attention.