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How much can I borrow with Equity Release?

letter blocks spelling 'equity'

If you are thinking about releasing equity from your home, you may be wondering just how much you can borrow exactly.

What is Equity Release?

Equity Release is the term used where homeowners over the age of 55 access their property wealth by releasing a tax-free cash lump sum, usually by way of a mortgage designed to assist later life borrowers called a Lifetime Mortgage which is not income assessed.

How much can I borrow?

The maximum amount you can borrow is mainly based on age and the property value.

However, there are several variables that may also impact on how much you can borrow, including your age, health, the value and condition of your residential property and whether or not it is a joint application that you are making.

Your age

Age is the primary determining factor when it comes to how much you can borrow.

Put simply, the older you are, the more you are to be able to borrow.

If you are closer in age to 55, you will not be able to borrow as much as someone who is 70+.

This is due to life expectancy, so if you choose not to service the interest and allow it to roll up over the lifetime of the mortgage, the lender needs to be assured that there will still be enough equity in the property at the point of sale to repay the loan including any interest accrued. As such, the potential term of the mortgage needs to be factored in, too.

The value and condition of your property

This is an important factor when determining how much you can borrow.

Your property will be subject to a professional valuation prior to your loan being approved, in order to ensure the lender can be confident that they are lending against a property that will maintain or increase in value over time.

As such, factors including the area, type of property, overall condition, the building’s materials, average house prices in the area and potential growth will be assessed.

If you are wondering how much you could borrow with Equity Release, we can help. Get in touch today.