When considering an equity release scheme, many people can become a little overwhelmed by the different types of finance offered. From lifetime mortgages through to a home equity loan, it can be difficult to contemplate the benefits of different packages and schemes without adequate tools.
What Exactly is an Equity Release Calculator?
Equity release calculators are online tools which offer a free method of determining how much equity can be released from your home. They can also be used to determine whether you meet the minimum qualification criteria such as the minimum age of fifty-five. Many people are aware of the basics of home equity schemes such as the ability to retain residency rights for the remainder of your lifetime, but a great number of people remain confused about the particulars of different schemes. An equity release calculator can be used to explore the options of a home equity loan to determine if it is the right course of action for your circumstances.
How an Equity Release Calculator Works
The equity release calculators are pre-programmed with a formula for determining the qualification and value of a home equity loan. They are simple to use and require you answer basic questions about your personal information, property and financial situation. This information is applied to the lending formula to establish the amount of equity release you would qualify for.
Unlike conventional home owner loans such as repayment mortgages, a home equity loan has a more detailed set of qualification criteria and an equity release calculator can assess the answers to the questions to determine which schemes are available options for your circumstances. Many of the more sophisticated calculators will even provide home equity loan information and the ability to compare a number of potentially suitable schemes and rates.
Why is an Equity Release Calculator Important?
For most people the primary consideration for equity release is whether it will release sufficient funds for their plans. In most cases, the equity release calculator tools can confirm or deny whether the amount needed is possible. It can also ensure that you would meet the basic requirements for the equity release scheme. For example, there may be particular restrictions on the amount of equity which can be released for your type of property, or you may be unaware that equity release decisions will be based on the age of the younger party in joint applications. This can save people wasting time researching equity release when it is obviously not the right choice for them.
Factors Considered by an Equity Release Calculator
There are a number of factors which must be considered for a home equity loan. In order to assess these factors, home owners using these tools are asked questions relating to a number of details including:
• The age of the applicant: As mentioned above, there is a minimum age criteria for a home equity loan. However, age is also an important consideration for what percentage of equity can be released. This is because these types of financial products are designed to be a lifetime scheme. The provider will need to estimate the duration of the term for the loan, so it will be based on your age. As a general rule, those applicants who are in the lower age groups will be offered a lower percentage of release when compared to someone older.
• Gender: This helps the lender to estimate your potential lifespan based on average figures. For example, generally women tend to have a longer lifespan than men. Therefore a lone female applicant would be offered a lower percentage of equity release when compared to a male applicant of the same age.
• Health: Some providers offer an enhanced home equity loan for those people who have an impaired life expectancy due to ill health or terminal illness. This can vary according to the specific criteria of the provider, but you may be offered additional release funds based on habits such as smoking or long term conditions such as diabetes.
• The value of the property: This is used to determine how much equity is available in the property. The calculator will deduct the balance of any mortgage or secured loan currently secured on the property from the value to determine the level of equity.
If you are interested in a home equity loan, an equity release calculator can prove a beneficial research tool. It can provide the basic information needed to make an informed decision about whether equity release would satisfy your requirements and whether it would be beneficial to proceed with an application.