Can an Equity Release Calculator Show Enhanced Equity Release Results?
The money you can attain by using equity release is a tax free sum. It can be used on any number of expenses during your retirement. You might use it to pay off your debts, repay a mortgage, or take that once in a lifetime holiday around the world. How you use it is of little concern to the equity release company. They are more interested in their profit based on your ability to repay the lifetime mortgage. By using an equity release calculator you can determine the amount you can receive from equity release. The enhanced equity release results may be the first place you start looking.
Equity Release Options
Before launching into details about what the calculators can provide in a calculation, it is important to understand the two products: home reversion and lifetime mortgage. Home reversion is a sale of your home. It can be a partial or entire sale in which you are given a percentage of home value that is lower than the total property value in the current market. The company makes their money once you sell the entire property to them, as they are able to sell it for the current market value recouping what they gave you in a tax free sum plus the difference in value versus what you received. This is the profit.
Age and property value, plus how much you are willing to sell of the property give you the maximum lump sum of cash you can receive. You do not have to pay it back.
Lifetime mortgages are different. You do have to repay the money given to you because you do not sell the home but take out a loan with compounding interest. The repayment is made at the time of your death or when you no longer have the house as your main residence. A sale may be needed to repay the loan. Your age and property value applies to the calculation. The standard lump sum lifetime mortgage rate will also apply for most calculations.
It needs to be mentioned that most calculators use an average annual percentage rate, which you may or may not be able to change. It is not always the APR you will be awarded with your mortgage. This is a factor that can change the maximum lump sum shown on the calculator.
Other Lifetime Mortgage Products
The standard lump sum lifetime mortgage is just one of the products on the market. You have others like enhanced equity release. An enhanced equity release allows you to take out a higher lump sum than the standard product. The assumption is that your ill health will lower your life expectancy and thus the return of the loaned amount is quicker than someone in good health.
Remember the company is in the business to make money, which is done by offering you a lump sum based on your property value, compounding interest, and the life you have left as the repayment is given at the end of your life rather than during your life like a standard mortgage product.
As the enhanced equity release results differ from the standard lifetime mortgage, there is a necessity to use the enhanced lifetime mortgage calculator to gain these values, versus using the standard equity release calculator. This is why most websites are now offering both result options. You can see the differences between the two loan amounts and decide what is truly best for you. If you need every last penny you can get through the maximum equity release, it makes sense to examine an enhanced version as a way to pay off your debts or simply get that holiday you want.
Gaining Proper Help Deciding
While a calculator can be extremely helpful in the beginning of your research to determine whether you can actually get the lump sum you need or not, you still need to speak with an independent financial expert in the equity release industry. An expert can help you determine whether or not there is more to be had from your property value.
The enhanced calculator works on worst case scenario options, based on the information you input. An independent broker may be able to access more funds based on their health and lifestyle questionnaire. You might see better enhanced equity release results from the broker as they also shop around to see what products are out there and what is best for you and your specific condition.