Retirement Mortgage Calculator

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What is a Retirement Mortgage?

A Quick Introduction to Retirement Mortgages

A retirement mortgage is an umbrella term for a group of financial products designed for retirees to release the value tied up in your home whilst 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 an approximation of how much equity you could release from your home by utilising these products.

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 are 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?

Calculating your mortgage payments in retirement involves considering interest rates, loan amount, and term length. Online calculators can provide a quick estimate, helping manage financial planning.
  • Last Updated: 14 May 2024
  • Fact Checked Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui
What Is the Best Retirement Mortgage Calculator for UK Homeowners? Use Our Free Calculator and Discover the Pros and Cons These Plans. It Is All Here, So Look No Further!

If you are 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 is 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 on your retirement mortgage journey here?

In This Article, You Will Discover:

    We pride ourselves on staying up to date with the equity release market so that we can bring you the most reliable information about the later-life lending space.

    Calculating Retirement Mortgages

    What Is 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 can 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 will need to pass an affordability check.

    Most later-life lenders will loan you 4.5x 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 do not need 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 it’s 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 accrued 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 may get depends on your circumstances; however, generally, a lifetime mortgage’s interest rate ranges from 5.25% 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.

    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.

    More information…

    Lump-Sum

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

    You will receive a one-off, tax-free lump sum; 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 useful because you can get a lump sum upfront and 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 six 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 repay the interest portion monthly; the nice part is that you will 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?

    How Does a Retirement Mortgage Calculator Work in the UK?

    Where Can I Find a Reliable Retirement Mortgage Calculator?

    How Accurate is a Retirement Mortgage Calculator?

    What Factors Does a Retirement Mortgage Calculator Consider?

    How Can a Retirement Mortgage Calculator Help Me Plan My Retirement?

    In Conclusion

    Using a retirement mortgage calculator, you will 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.

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