The honest answer is that it comes down to two things: your age, and what your home is worth.
Not your income. Not your credit score. Not what you earn or used to earn. A lifetime mortgage is assessed against your age and your property, which is why it is available to people that ordinary lending has stopped saying yes to.
Here is roughly what that looks like.
What you could release, by age
| Your age | Up to this much of your home's value |
|---|---|
| 55 | 28% |
| 60 | 32% |
| 65 | 37% |
| 70 | 44% |
| 75 | 49% |
| 80 and over | 60% |
The older you are, the more you can release. That is the whole logic of it, and it catches people out because it is the opposite of how a normal mortgage works.
A worked example. A home worth £300,000, owner aged 70. Up to 44% gives an indicative maximum of around £132,000. If there is £40,000 left on the mortgage, that has to be repaid out of the money released, so roughly £92,000 would be left over.
That figure is a guide, not an offer. Your actual figure depends on your circumstances.
The bits that catch people out
If there are two of you, it goes on the younger age. A couple aged 74 and 66 are assessed at 66, not 74, and not the average. This surprises almost everyone, and it is worth knowing before you start doing sums at the kitchen table.
Your existing mortgage has to be cleared. If you still owe on your home, that balance is repaid either before or when the plan completes, usually out of the money released. So the number that reaches your bank account is what is left after that.
Health can work in your favour. Some lenders will offer more to people with certain health conditions or lifestyle factors. It feels like an odd thing to benefit from, but it is worth mentioning rather than assuming it counts against you.
Where you live plays a part. Property location affects what lenders will offer.
The limits
- Smallest amount you can release: £10,000
- Least your home can be worth: £70,000
- Oldest you can be: there is no upper age limit
- Youngest you can be: 55 for a lifetime mortgage
Your home needs to be your main residence, in England, Scotland, Wales or Northern Ireland, of standard construction, and you need to own all of it. Houses and flats both qualify, freehold or leasehold, though a leasehold property generally needs more than 75 years left on the lease.
Annexes, large plots of land, unusual construction and properties held in trust are not automatically ruled out, they just need to go to a lender directly rather than through a standard check.
Just because you can does not mean you should
This is the part most websites skip.
The maximum is not a target. Interest on a lifetime mortgage rolls up, meaning it is charged on the amount borrowed and then on the interest already added. Take more than you need and that compounding works against you for the rest of your life.
Our advice is to borrow only what you need. If you need £40,000, take £40,000, even if the sums say you could have £132,000.
Most plans include a drawdown facility, which lets you take an initial amount now and leave the rest available to draw on later. You only pay interest on what you have actually taken. For a lot of people that is a better answer than taking the lot up front, and there is no set-up cost each time you draw from the agreed facility.
What you will never owe
Every plan we arrange carries a no negative equity guarantee. Whatever happens to house prices, neither you nor your family will ever owe more than your home sells for. The debt cannot be passed on.
Not sure how any of this applies to your own circumstances? Craig is happy to talk it through, free and with no obligation.
Getting a real number
The table above will get you in the right area. It will not tell you what a lender would actually offer you, because that depends on your property, your age, your health and your circumstances.
If you want a real figure, that is a conversation rather than a calculator. Craig has spent his whole career in later life lending and will tell you plainly if equity release is not the right answer for you, which happens more often than you might expect.
Book a call with Craig or call 0113 403 5584.
