How Much Equity Can I Release From My Home?

If you are considering equity release, one of the first questions you are likely to have is: how much could I actually release from my home?

There is no single percentage or amount that applies to everyone. With a lifetime mortgage, the amount potentially available will depend on a combination of factors including your age, the value of your property, any borrowing already secured against it and the criteria of the lenders available to you. Your health and lifestyle may also affect the amount available with some products.

So while online equity release calculators can provide a rough indication, the actual amount available can only be established once your individual circumstances have been considered. If you are new to the topic, you may find it helpful to start with our guide to what equity release is and how it works.

What determines how much equity you can release?

Lifetime mortgage lenders each have their own criteria, but several factors are particularly important.

Your age

Age can have a significant influence on the amount available. Generally, the older the youngest applicant is, the greater the proportion of the property’s value that may potentially be available. This is because a lifetime mortgage is usually expected to remain in place until the last borrower dies or moves permanently into long term care.

Some lifetime mortgages are available from age 55, although minimum ages vary between providers and products. For joint applications, it is normally the age of the youngest applicant that is particularly relevant when calculating the amount available.

The value of your home

The value of your property is another major factor. A lender will normally arrange a valuation as part of the application process. The amount available is calculated as a percentage of the property’s accepted value rather than simply allowing you to access all of the equity you have built up.

For example, owning a £400,000 property outright does not mean you could automatically borrow £400,000. Lifetime mortgage lenders restrict how much can be borrowed in relation to the property’s value.

Do you already have a mortgage?

You can potentially take a lifetime mortgage even if you still have an existing residential mortgage. However, any mortgage or other secured borrowing that needs to be repaid will normally have to be cleared when the lifetime mortgage completes.

Imagine your home is worth £300,000 and you still owe £30,000 on your mortgage. If the lifetime mortgage available to you was £70,000, the existing £30,000 mortgage would normally need to be repaid first. That would leave approximately £40,000 before taking into account any relevant fees or costs.

This is why the amount that can technically be borrowed and the amount actually available for you to spend can be different.

Can your health affect how much you can release?

Potentially, yes. Some lifetime mortgage providers offer enhanced terms where certain medical conditions or lifestyle factors are taken into consideration. In some circumstances, this may allow someone to access more than would otherwise have been available.

This does not mean that having a medical condition will automatically result in a larger loan. The lender will consider the specific circumstances and its own underwriting criteria.

Does the type of property matter?

Yes. Your property is the security for the lifetime mortgage, so lenders need to be comfortable with it. They may consider factors such as:

• property value
• construction type
• condition
• location
• lease length if the property is leasehold
• whether there are restrictions affecting the property
• whether parts of the property are used commercially
• whether the property would be considered readily saleable in the future

Different lenders can have different property criteria. This means that two homeowners of exactly the same age with homes of exactly the same value may not necessarily have the same options available.

What percentage of my house can I release?

This is where it is important not to rely too heavily on headline percentages. The maximum loan to value available tends to increase with age, but each lender has its own limits.

Rather than asking “what is the maximum percentage I can release?”, it is often better to start with “how much do I actually need and what am I hoping to achieve with it?” Those are two very different questions.

You do not necessarily need to take the maximum

Being able to release a certain amount does not mean you should automatically take it. Suppose you could potentially release £100,000 but only need £25,000. There may be little reason to borrow the additional £75,000 simply because it is available.

With many lifetime mortgages, interest can be added to the loan and compound over time. Borrowing only what is genuinely required can therefore be an important part of later life planning.

Could a drawdown lifetime mortgage be better than taking everything at once?

For some people, it may be worth considering. With a drawdown lifetime mortgage, you take an initial amount and may have a further agreed amount available to access later.

For example, you might need £20,000 now for home improvements but also want money potentially available later for:

• replacing a car
• helping family
• future home adaptations
• holidays
• additional retirement spending

Instead of taking the entire amount immediately, a drawdown arrangement may allow some of the money to remain available until it is actually required. Interest would generally only begin to apply to each amount once it is withdrawn, subject to the terms of the particular product.

Why taking less can sometimes matter

A lifetime mortgage is a long term commitment. The more you borrow, the more interest could potentially accumulate if you are not making repayments. Taking a larger amount can also leave less equity available later. That could affect things such as:

• future borrowing
• moving home
• funding care
• helping family in future
• the inheritance eventually left to beneficiaries

What if I want to leave an inheritance?

This is an important part of the conversation. A lifetime mortgage is normally repaid from the value of your home when the plan eventually ends. The amount borrowed and any interest that has accumulated can therefore reduce the amount of your property’s value remaining for your estate.

Some lifetime mortgage products may allow a portion of the property’s value to be protected for inheritance, although this can affect the amount available to borrow. If leaving a particular inheritance is important to you, that should be considered before deciding how much to release.

Could releasing equity affect my benefits?

Potentially. Receiving money from your property may affect entitlement to certain means tested benefits or other support. The important question is therefore not simply “how much could I release?” but also “what effect could releasing that money have on the rest of my finances?”

Is there a minimum amount you can release?

Most providers will have a minimum initial borrowing amount. This varies between lenders and products. This is another reason why product availability needs to be considered against what you actually want the money for.

Can an online equity release calculator tell me exactly how much I can get?

No. A calculator can be useful for giving you an initial indication. But it does not usually take account of every factor a lender will consider. It may not fully account for:

• the exact property
• existing borrowing
• health information
• individual lender criteria
• property construction
• leasehold restrictions
• your objectives
• whether another type of later life mortgage could be more appropriate

So it should be treated as an indication rather than an offer.

How much should I release?

This is arguably more important than asking how much you can release. Before deciding on an amount, it can help to think about:

• What is the money actually for?
• How much do I need now?
• Could I need more later?
• Could I achieve the same objective another way?
• Would taking a smaller amount initially be enough?
• How would borrowing affect my inheritance?
• Could it affect any means tested benefits?
• Would I want to make repayments?
• Could my circumstances change in future?

Sometimes the answer may be a lifetime mortgage. Sometimes another type of later life mortgage could be more suitable. And sometimes releasing equity may not be the appropriate solution at all. You can read more about the wider options in our guide to later life lending or explore whether equity release is right for you.

Equity release advice in Swansea and across the UK

At Cariad Later Life Solutions, we look at much more than the maximum amount a lender may be prepared to offer. We start by understanding what you are trying to achieve and why you are considering accessing money from your home.

From there, we can explore the available later life lending options, including whether a lifetime mortgage, Retirement Interest Only mortgage or another solution may be appropriate. Appointments are available from our office in Swansea as well as by telephone or Teams for clients further afield. Find out more about equity release advice in Swansea or read our frequently asked questions.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. Equity release may reduce the value of your estate and may affect your entitlement to means-tested benefits. Our equity release advice relates to Lifetime mortgages only.

A lifetime mortgage is a loan secured against your property. The information in this guide is for general information only and is not personal advice. Suitability depends on your individual circumstances, and specialist advice is required before proceeding.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.