You are interested in equity release (ER) schemes or you hit this page accidentally. It is more likely you are in need of a financial product and want to find a way to determine which financial product you qualify for. First, equity release schemes in discussion here are for the over 55’s. They are home reversion or lifetime mortgage products designed to help you through retirement when your pension and other retirement income is not enough to sustain your lifestyle or give you the dream holiday you desire. Since there are different equity release products on the market, there are different equity release schemes calculator tools for you to use: standard, enhanced, interest only lifetime mortgage and home reversion. Each of these will be discussed.
What a Calculator Shows You
An equity release schemes calculator can provide you more than one result depending on the type you find. The standard calculator is designed to show you all but interest only lifetime mortgage results and home reversion. These calculators take the information you input and spin out a number. They are as accurate as the information put in. Also they work on two pieces of essential information: age and home value.
Your age has to be at least 55 years of age. Some companies offer products for a specific age group in retirement such as those 75 and over. Using their calculator would mean a potential result you could not get if you are not yet 75, thus using an independent website calculator is best.
For home value you need an accurate appraisal or “value” for today. An older valuation is not going to help since homes can appreciate and depreciate. You can use sites like Zoopla to gain a more accurate number or even Nationwide if you have an older appraisal. Always remember no matter the calculator your use, it is a guideline of what could be and not set in stone.
A standard ER calculator is based on a person who is in good health. It is always calculated using the youngest homeowner living in that house. It means the youngest homeowner has to be at least 55 years of age. As already stated the estimated property value will also be used in this calculator to provide you with a result.
An enhanced calculator version is based on a product for poor health. An ill health lifetime mortgage provides a larger lump sum than the lump sum mortgage because the assumption is a person will pass on earlier than is average for their current age. The loan will not be outstanding as long in other words. There are criteria to meet for this type of retirement loan. A list of illnesses can be found at Aviva; however, here are a few:
• Issues as a result of smoking
• High blood pressure
• Heart disease
• Multiple sclerosis
• Musculoskeletal disorders
• Chronic kidney failure
• Cirrhosis of the liver
• Motor neuron diseases
If you have one of these diseases or one listed on Aviva, then you could qualify for this type of loan. The calculator often works with the worst case scenario regarding your illness, but again it is always based on the youngest homeowner and the property value. In this case the youngest homeowner has to be the one with ill health. You should be aware the calculations are not always accurate since the final figure is based on a health and lifestyle questionnaire that an ER adviser assesses. You can definitely use it as a guide.
Interest Only Lifetime Mortgage
An interest only ER allows you to pay the interest rate accruing on a monthly basis thereby leaving the principle balance unchanged for the life of the loan, which is until your death. The calculation is based on the youngest applicant and property value again. The difference is in the loan to value calculations. There are new MMR rules for affordability that could change what is quoted with the calculator.
Home reversion is not a loan so it has no interest. Instead you sell a part of your home or the entire home to a company. The equity release schemes calculator will account for your age (at least 65 years of age) and how much equity release you require. It is a percentage of the value of your home. You get to remain in the home rent free and sell the home in full at death.