Your property is an asset with a financial value assigned to it. Value is relative to many things including area, supply and demand, upkeep, age, and renovations. It is also based on current economic situations, which is in a way related to supply and demand. For an equity release calculator UK to work, you need the value of your home. Simply for a calculator to be accurate you need to be as certain as possible in the value of your home. Another factor for accuracy with an equity release calculator UK is your age. Your age determines the loan-to-value of the property or basically the percentage the lender is willing to give you in equity based on your age or the age of the youngest homeowner. The youngest homeowner is always used for the calculation.
Lifetime mortgages can start as early as age 55; however, waiting until after retirement and an older age will provide a larger maximum lump sum of tax free cash.
Learning the Value of your Home
It is quite possible you do not know the accurate figure of your home value; especially if you have lived in your home for several years. Many families who have raised children in the same home for 18 years and lived there for another ten until retirement do not have an updated appraisal. The Internet comes in handy once again for this because there are several house pricing websites that offer estimates of true value.
Zoopla is one example, which tells you of houses currently on the market and those that have recently sold based on your postcode. While these sites are not always perfectly accurate, they will give you a good idea of current sales and potential appraisal amounts. As stated, many things go into valuing a home including repairs. Any repairs to the outside or that are considered as adding value to the home will help your home appraise higher than an un-renovated home.
If you live in an area of high demand and low supply, this can also increase the appraised value. You have something someone wants; therefore, it is worth more.
For those who are able to find previous appraisal figures, such as a past mortgage or survey from buying the home, you can use Nationwide. Their website offers a useful house price indexing tool that projects what a house might be worth based on the area of the UK you are located in. The tool will ask for the date of the valuation, the area, and use house price indices to ascertain the current value of the home. It is a guideline figure, but useful as a means of determining potential maximum equity release amounts.
Understanding Age and Loan to Value
An equity release calculation uses the age you provide to offer a percentage of equity that can be released. Someone who is aged 65 should be able to release approximately 31% of their home value from most UK lenders. If you plug in your age and a home value of £100K then you can receive £31,000 in an equity release. If a home is worth £1 million then 31% equates to a maximum of £310,000.
Remember, the older you are the less time you are estimated to have left. This is with anything, and it is especially important when calculating equity release amounts. Lenders figure if you are older you will die sooner than someone who is ten or 20 years behind you in age. As the money is not going to be outstanding for as long, there is a potential to gain even more.
Accuracy and Certainty
Mortgage calculators for equity releases can certainly be accurate based on the information you input; however, you will not have any certainty of the actual amount until a broker crunches some numbers and determines what equity release they are willing to offer and at what interest rate.
Interest rates are often dependent on age, value, and the Bank of England base rate. Current rates can be found at approximately 5.50% with some companies. This is a fixed rate. There are some lower with a variable rate.
To determine if you are willing to afford the loan or the maximum amount you are able to take out, it is best to speak with an independent adviser who is knowledgeable and qualified to discuss equity release products. In this way you can compare the equity release calculator UK results with an independent set of advice from a person in the industry to find the best deal for you.
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