Lifetime Mortgage Calculator
Lifetime Mortgage Calculator
Do you need access to extra retirement income?
Use our lifetime mortgage calculator today and find out just how much you could get.
A lifetime mortgage gives you access to the capital locked up in your home as a tax-free lump sum; it might be the key to making your retirement comfortable.
Through this article, we’ll help you discover:
- What’s a lifetime mortgage?
- Types of lifetime mortgages.
- Why use a lifetime mortgage calculator?
Our industry experts have worked tirelessly to bring a market-leading lifetime mortgage calculator that’s accurate and simple to use.
Go ahead and try it!
Before You Start Reading….
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What’s a Lifetime Mortgage?
A lifetime mortgage is a loan that’s secured against your home; it enables you to live in your home while maintaining 100% ownership.
It does attract interest which is compounded and repaid when your home is sold if you pass on or move into permanent care.
There are no mandatory capital or interest repayments, although you can make voluntary payments if you wish.
How Is a Lifetime Mortgage Calculated?
A lifetime mortgage is calculated based on the youngest homeowner’s age and your property value.
Using the youngest homeowners’ age, the lender calculates a loan to value (LTV); this is a percentage value of your home’s worth that can be released using a lifetime mortgage.
The younger you are, the lower the percentage of your home’s equity you can access will be.
How Is Interest Calculated on a Lifetime Mortgage?
Interest on a lifetime mortgage is calculated based on a fixed interest rate.
The interest is charged on a compound1 basis, meaning that interest is added to the capital balance, and then interest is charged on that amount.
Interest is calculated daily at the fixed agreed interest rate; this is usually added to the outstanding loan value annually; each lender’s process will differ.
This means that you pay interest on interest, which makes a lifetime mortgage potentially expensive if you don’t make any interest repayments.
What are the Benefits of Using a Lifetime Mortgage Calculator?
The benefits of using a lifetime mortgage calculator are that you’ll have a reasonable estimate of the amount of capital you can unlock from your home.
A lifetime mortgage calculator can assist you in the following ways:
- With an estimate on hand, you can have a meaningful discussion with your financial adviser2 when it comes to applying for a lifetime mortgage.
- You can use it to compare the effect of different interest rates on the final loan amount you’ll owe.
- You can compile a comparison of what each potential provider might be willing to lend you.
Types of Lifetime Mortgages
The types of lifetime mortgages available are lump-sum lifetime mortgages and drawdown lifetime mortgages.
Here we look into these.
Lump-Sum Lifetime Mortgages
A lump-sum lifetime mortgage allows you to withdraw equity from your home in one tax-free lump sum.
A lump-sum lifetime mortgage attracts interest on the total amount borrowed and paid out.
This will be settled one day when you pass on or move into permanent care and your home is sold.
There are no mandatory repayments required, but you can make them voluntarily.
Drawdown Lifetime Mortgages
A drawdown lifetime mortgage allows you to release an initial lump sum while establishing a reserve account where you can withdraw additional cash as and when you need it.
The benefit of a drawdown lifetime mortgage is that you only pay interest on the money withdrawn and not on the full amount.
Is a Lifetime Mortgage Right for Me?
To determine if a lifetime mortgage is right for you, it’s best to consult with your accredited financial adviser.
Is a Lifetime Mortgage Calculator Easy to Use?
Yes, a lifetime mortgage calculator is easy to use; all you have to do is enter your basic information, and you’ll get your results in an email in mere seconds.
How Do You Use a Lifetime Mortgage Calculator?
You use the lifetime mortgage calculator by entering your age, property value, and postal code; simply click submit, and you’re done.
How Much Can I Release with a Lifetime Mortgage?
You can release between 20% and 60% of our home’s value.
The amount you can unlock will increase with age.
What Are the Benefits of Using a Lifetime Mortgage Calculator?
The benefits of using a lifetime mortgage calculator are that you’ll have a good estimate of how much capital you can expect to release.
You can then consult your financial adviser and have a meaningful conversation.
There’s never been a better time to free up some tax-free cash with a lifetime mortgage.
With the Equity Release Council3 regulating and overseeing the industry and low interest rates, you should use our lifetime mortgage calculator today.
Always contact your financial adviser to assist you with any financial decisions.
How Much Can You Release?
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Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.