If you are considering equity release to top up your retirement fund it’s important to know how much you can release before you make your decision. Justin Cole, director at SunLife, explains which factors can influence the figures
Equity release can be a great way to get some additional cash if you’re over the age of 55. If you’re eligible, the amount of equity you can release is usually between 20% and 60% of the value of your home.
However, this amount is different for everyone and depends on a range of factors, such as what your home is valued at and your age.
What impacts how much equity I can release?
There are two main factors which impact how much equity you can release as part of your chosen plan.
The first is how much your property is worth, as if you decide to progress with equity release, your provider will arrange for your home to be professionally valued.
Your property’s value will depend on a number of different things, including its size and location, its condition, the type of material it is made of, its status – such as whether it’s a listed building – and the debt secured against your property. For example, this might be the amount of mortgage which is outstanding on your home.
The second is how long you’re likely to live after confirming your equity release. Your provider will base this on your age and health. If it’s a joint application you’re making with someone else, it’ll be based on the age and health of the youngest applicant.
Is there a minimum or maximum amount I can release?
Typically, most people release between £10,000 – £100,000, with the minimum amount you can release usually round £10,000.
The maximum amount you can borrow with an equity release is usually up to 60% of the value of your home.
Ultimately, the exact amount will depend on your age, your health and the value of your home. We’ve put together a handy table below which shows an idea of how much cash you could access if you’re eligible for an equity release.
| Your home’s value | |||||
| Your age | £100,000 | £200,000 | £300,000 | £400,000 | £500,00 |
| 55 | £28,500 | £57,000 | £85,500 | £114,000 | £142,500 |
| 65 | £40,000 | £80,000 | £120,000 | £160,000 | £200,000 |
| 75 | £50,000 | £100,000 | £150,000 | £200,000 | £250,000 |
| 85 | £58,000 | £116,000 | £174,000 | £232,000 | £290,000 |
Is there an alternative to equity release?
Taking out an equity release is a huge decision, so it’s important to consider the pros and cons first.
Alternative options include downsizing to a smaller home or moving to a less expensive area.
Additionally, if you have any savings or investments you could draw from these to help top up your retirement pot or maintain your lifestyle after you’ve finished working.
Speaking to a professional financial adviser can help you decide which option might be best, as you can chat through your finances, circumstances and any concerns regarding an equity release.
Justin Cole is director at SunLife, which provides equity release to UK homeowners
