Growing numbers of homeowners aged 55 and over are using equity release to boost their retirement income, fund home improvements, pay for long-term care, or for a different purpose altogether, but how much can you borrow?

Equity release can provide you with a lump sum, regular income payments or a combination of both, without having to sell your home. Any money released, plus the interest that builds up over the years, is usually repaid when you die, or move into long-term care. You can read more about equity release in our guides Am I eligible for equity release? and Equity release – what is it and how does it work?

Unlike a conventional mortgage, you won’t be subject to affordability tests to determine how much you can borrow. Instead, the amount you can borrow will depend on factors such as your age, health and the value of your home.

Here we explain how much equity you might be able to release, and what affects the amount you can borrow.

How much can I release?

The percentage of your property’s equity that you can release depends partly on your age. Put simply, the older you are, the greater the proportion of your property’s value you may be able to borrow.

At age 65, you can typically borrow around 25% of your home’s value, but this can rise to as much as 50% or 60% if you’re older. This is because it’s likely to take less time for the equity release provider to recover their investment, compared to a younger applicant who may live for much longer. Most equity release providers have a maximum applicant age limit of 85.

If you want to see how much you might be able to release from your home and how much it could cost, this equity release calculator can give you an estimate. Fill in a few details to get an estimate.

What impacts on how much equity I can release?

An equity release provider will consider other factors that could affect the amount of equity you can release from your property:

How much your property is worth

The condition and value of your home will be a factor in working out how much you can release, as the equity release lender needs to lend against an asset that will maintain its value over time. The equity release provider will arrange for your home to be professionally valued before any equity is released. For example, if your home is valued at £300,000, and you can borrow 25% of its value, this amounts to a lump sum of £75,000.

How long you’re likely to live after taking out an equity release plan

It’s impossible for the provider to know how long you will live, but there will be some assumptions made that are based on your age and health. If you’re making a joint application, the amount you can release will be based on the age and health of the youngest applicant.

Someone with an ongoing health condition may be able to release a greater percentage of their property’s wealth than a person of the same age in full health. Equity release plans may be medically underwritten, so if you have a health condition this may enable you to access a larger percentage of your property’s equity.

Any outstanding debts

These include secured debts such as an outstanding mortgage, and unsecured debts such as personal loans and other forms of credit. These may need to be cleared for you to release money using equity release, or if you have debts outstanding, the lender may require you to use some of the money released to pay these off.

Joint versus single equity release plans

If you’re taking out an equity release plan as a couple, you may receive slightly less money than if you applied as a single person, as there’s a greater chance that the loan will run for longer if it’s provided to two people.

Minimum equity release loan amounts

Most lenders won’t let you release less than £10,000 of equity from your property, and some have a higher minimum lending amount.

What if equity release isn’t an option?

If you need extra funds, equity release isn’t your only option. There are several alternative solutions which may help you achieve what you need, and which is suitable for you depends on your personal circumstances.

For example, if you’re under the age of 55, and want to remortgage to release equity, you may want to consider a retirement interest-only mortgage. The loan is only repaid when you die or sell your house, but you need to continue making interest payments on the outstanding balance. Read more about these in our article How retirement interest-only mortgages work.

Remortgaging could also be an option, if you still have a mortgage to repay on your home. You may be able to extend the loan term, say, or borrow more to provide some extra cash. Alternatively, you may want to consider taking out an unsecured personal loan if you’re not looking to borrow a large amount and can afford to make regular payments.

If you need a large amount it may make sense to sell your property and move to a smaller house. However, fees such as stamp duty and estate agent fees can eat into your money, but you’ll receive the market value for your home and have a clear view of where you stand. If you’re thinking about downsizing, our article Five questions to ask yourself if you’re considering downsizing your home may help you to work out whether this is the right decision for you. Read more about all these different options in our article Alternatives to equity release.

Getting advice on equity release

If you’re considering equity release, your first step should be to seek advice from a qualified financial advisor. You can find a local financial advisor on VouchedFor, the review website for financial advisors, or Unbiased, which connects users to advisors in their area, or for more information, check out our guides on How to find the right financial advisor for you.

They can help you understand the best option for you and recommend a suitable product from a member of the Equity Release Council (ERC). The council has a number of product standards which help safeguard borrowers so it is important that any provider you choose is a member. Advisors can also be members of the ERC. You can search for an equity release provider that belongs to the ERC here.

If you’re looking for somewhere to start, you can get fee-free expert advice from a Rest Less Mortgages equity release specialist, with no broker fees on application. They are active members of the ERC and can advise on equity release mortgages from the whole of the market. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.

Have you recently released equity from your home or are you considering doing so? We’d be interested in hearing from you. You can join the money conversations on the Rest Less community or leave a comment below.

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