What if you start talking with a broker about potential equity release products for your retirement? What if after you go through the whole process with a credit check, credit score check, age analysis, home value appraisal, and health questionnaire only to be turned down? It would not make your day, right? In fact, you would be pretty upset over wasting so much time listening to a broker and how your situation would provide you a loan. Worse you may find that you cannot afford the loan the broker is willing to offer you after all that time spent. Rather than reach such frustration levels, you can use an equity release calculator UK to determine whether you can afford the loan right at the outset. This is where the ER calculator scores highly.
How the Process Works
Before you get involved in the calculator to obtain a figure, you should understand that equity release is for over 55s. It is not a product someone under 55 can obtain. If you have yet to reach 55 or are not in retirement, you can still use the equity release calculator to arrive at a retirement plan. You may have five years where you can make more money and remove the need for such a loan altogether. You may also find you can reduce what you need to borrow once you have a plan in place.
You will also need to understand the current value of your home. If you have an appraisal that is a few years old this is good. For many, their last appraisal was when they purchased the home. If you can find this value you can use Nationwide to determine your home’s approximate value. If you do not have the home value you can use Zoopla and Right Move to search for recent sales and current listings on the market. This gives an approximation only, so you can only use the equity release calculator UK as a guide.
Types of Calculators
Also, make certain you are using an appropriate calculator for the type of equity release product you want. If you want an interest only lifetime mortgage, you need to use an interest only lifetime mortgage calculator. This calculator accounts for the different loan to value criteria interest only products have, versus the standard lump sum tax free cash lifetime mortgage. Also, you have an impaired equity release calculator to help you with the enhanced lifetime mortgage, where the youngest homeowner has to have a serious illness as listed on Aviva’s website.
There are also home reversion calculators, which offer results for a partial or full sale of the home, versus a lifetime mortgage product.
Using an Independent Website
Going onto Aviva, Pure Retirement, More2Life or any other equity release mortgage company website will supply you with a calculator; however, it is going to be created for their products. The results will not be independent, so planning on the information will only help if you go with that company. You may find another company is willing to offer more or less in a maximum amount. This is why you want to use an independent website like equityreleasecouncil.com, equityreleasesupermarket.com, or many of the others that exist to use the calculator. These calculators are designed to compare results so they have the ability to look at more than one type of mortgage on the market at different interest rates and with different loan to value criteria.
Loan to Value Discussion
Each of the equity release products has a loan to value criteria that is used in the calculation. It is based on age. The older you are the more you can take out as a tax free lump sum. The premise is you are older and thus nearer to death than a younger individual. The loan will not be outstanding for as long and therefore the company can afford a larger lump sum payment. Of course, this is not always how life works. Some individuals live for 20 years longer than expected, while others make it only a few years. The point is that age factors into the sum.
If a person is 55 they might receive 19% loan to value, meaning the loan is 19 per cent of the value of the property. A person of 65 could receive 30%, so a home worth £100,000 would provide £30,000 in a loan. As you use the equity release calculator UK you should remember it is a guideline and you never have to take the maximum amount offered by a broker, instead take what is comfortable.