Retirement Mortgage Calculator

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What is a Retirement Mortgage?

A Quick Intro to Retirement Mortgages

A retirement mortgage is an umbrella term for a group of financial products designed for retirees to release the value tied into your home while still living in it.

Introduction to Retirement Mortgages
Calculating Your Retirement Mortgage

How it Works

How Do You Calculate a Retirement Mortgage?

You calculate the amount of equity you can release from your home differently depending on which provider and product type you choose.

An independent adviser or broker will provide you with a detailed analysis of your finances and calculated options for various retirement mortgage products you could consider.

The Pros

Benefits Of Using An Retirement Mortgage Calculator

The benefits of a retirement mortgage calculator can be significant.

A calculator will allow you to obtain a rough idea of how much equity you could release from your home by utilising these products.

Here are a few benefits of our calculator:

  • The calculator is simple to use and will provide you with an immediate emailed result with an estimate of your potential loan-to-value2.
  • You’re under no obligation to purchase any products or accept any offers.
  • We keep your personal information secure, so you can rest assured our calculator is safe.
Advantages of a Retirement Mortgage Calculator

How Much Can You Unlock with a Retirement Mortgage in 2024?

Are You Looking for the Most Accurate Retirement Mortgage Calculator in the UK? Use Our Free Calculator and Discover the Pros and Cons These Plans. It Is All Here, So Look No Further!
  • Last Updated: 22 Jan 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui

Let’s See How Much You Can Release in Seconds

Calculator - Main (Age, Prop Val & Phone)
53Years
50Years95Years

Drag me

£100000
£0£1500000

Drag me

Easy to Use & Very Fast
  • Easy to Use
  • Safe and Secure
  • Very Fast
  • Instant Results

If you’re a retiree who wants to find out if a retirement mortgage is viable for you, a retirement mortgage calculator may be the best place for you to start.

It’s always good to have a picture of what to expect before starting the retirement mortgage process. If you have a good estimate figure, you can manage your expectations.

Our retirement mortgage calculator is simple to use and gives you almost instant results; why not start here on your retirement mortgage journey?

In This Article, You Will Discover:

    We pride ourselves on having our fingers on the pulse of the equity release market so that we can bring you the most reliable information about the later-life lending space.

    Calculating Retirement Mortgages

    What’s a Retirement Mortgage?

    A retirement mortgage is a term used to describe a loan available to retirees secured against their primary residence in the UK.

    There are several types of retirement mortgages on the market, with the most popular types being lifetime mortgages.

    When you take out a retirement mortgage, you’ll make repayments on the capital and interest portions of the loan or just on the interest part, and sometimes no repayments are needed.

    A lifetime mortgage has no set term and is usually paid from the sale of your home when the last-named borrower has passed on or moved into permanent care.

    How Is a Retirement Mortgage Calculated?

    How a retirement mortgage is calculated will depend on the type of mortgage plan you choose.

    If you opt for a retirement mortgage that requires a monthly repayment, such as a retirement interest-only mortgage, you’ll need to pass an affordability check.

    Most later-life lenders will loan you 4.5 to 5x your annual income.

    With a retirement mortgage, your provider may only be willing to grant you a 50% LTV1. This is normally because your risk is higher due to your retirement income, which may only be a pension.

    If you choose an option such as a lump sum mortgage where you don’t have to make any repayments, then your LTV will increase with your age and property value.

    In this case, each deal will be structured according to its unique circumstances.

    How Is Interest Calculated on a Retirement Mortgage?

    Interest on a retirement mortgage is calculated on a compound basis.

    What this means is that you are charged an interest rate2 on your loan value daily; this amount is then added up monthly and added to your capital balance.

    This interest value then becomes part of the capital balance on which the next month’s interest is calculated, so you really pay interest on interest.

    The interest rate you’ll get depends on your circumstances; however, generally, a lifetime mortgage’s interest rate ranges from 5.20% to 6.30%.

    What Are the Benefits of Using a Retirement Mortgage Calculator?

    There are many benefits of using a retirement mortgage calculator, which will vary depending on the type of mortgage you choose.

    Here we look at the benefits in detail.

    • Retirement repayment mortgage – This calculator will help you determine how much you can borrow, how long a term you can expect and a possible interest rate.
    • Equity release – Compares a lump sum mortgage vs a drawdown mortgage’s effect on interest charges.
    • A flexible lifetime mortgage – Calculates the effect of regular payments on capital and interest portions vs no payments at all.
    • RIO mortgage – Calculate the loan cost and the interest value you can expect to repay monthly.

    Armed with the correct knowledge of retirement mortgage types, you can make an informed decision on what the best option is for you.

    Types of Retirement Mortgages

    The types of retirement mortgages include lump sum, drawdown, flexible and retirement interest-only.

    Here’s more information.

    Lump-Sum

    A lump-sum retirement mortgage is a loan secured against your home in the UK.

    You’ll receive a tax-free lump sum once-off; interest is typically compounded and paid with the loan value when you pass on or move into permanent care. 

    Drawdown 

    A drawdown retirement mortgage will also be secured against your UK home.

    It pays out an upfront lump sum.

    This is normally much smaller than a lump sum mortgage amount, but you have a drawdown facility to withdraw from when you need more funds.

    Flexible

    Flexible retirement mortgages are great because you get a lump sum upfront tax-free, and you get the option to make repayments on the capital, interest or both.

    The flexibility is that you can repay when you want to and can stop when you choose; with some providers, if you stop paying for over 6 months, it converts to a lump sum plan.

    Retirement Interest-Only

    A retirement interest-only mortgage is available to retirees and is secured against your main UK-based residence.

    With this plan, you’ll repay the interest portion monthly; the nice part is that you’ll never owe more than the initial capital amount as the interest value is paid monthly.

    Common Questions

    Is a Retirement Mortgage for me?

    Is a Retirement Mortgage Calculator Easy to Use?

    How Do You Use a Retirement Mortgage Calculator?

    How Much Can I Release with a Retirement Mortgage?

    In Conclusion

    Using a retirement mortgage calculator, you’ll get an instant estimate of how much equity you can expect to release with the type of mortgage plan you choose.

    You can also get an estimate of interest rates you could expect.

    With this knowledge, you can confidently start your journey towards getting a retirement mortgage.

    Using a retirement mortgage calculator is helpful but we always recommend that our readers seek sound financial advice before making any decisions or commitments.

    Let’s See How Much You Can Release in Seconds

    Calculator - Main (Age, Prop Val & Phone)
    53Years
    50Years95Years

    Drag me

    £100000
    £0£1500000

    Drag me

    Easy to Use & Very Fast
    • Easy to Use
    • Safe and Secure
    • Very Fast
    • Instant Results

    Editorial Note: This content has been independently collected by the Every Investor team and is offered on a non-advised basis. While we try & keep the information up to date & correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services mentioned in the website. Learn more about our editorial guidelines.

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