Equity Release Calculator
Estimate how much you could release from your home and see how the debt grows over time with compound interest.
Source: FCA — Equity release
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Maximum Tax-Free Release
£105,000.00
Up to 35% LTV at age 70
| Year | Amount Owed | Property Value | Remaining Equity |
|---|---|---|---|
| 1 | £111,825.00 | £309,000.00 | £197,175.00 |
| 5 | £143,859.10 | £347,782.22 | £203,923.12 |
| 10 | £197,099.43 | £403,174.91 | £206,075.48 |
| 15 | £270,043.31 | £467,390.22 | £197,346.92 |
| 20 | £369,982.73 | £541,833.37 | £171,850.64 |
| 25 | £506,908.41 | £628,133.38 | £121,224.97 |
Equity release is a lifetime mortgage. Interest rolls up, so the amount owed grows over time. Always seek independent financial advice. Assumes 3% annual house price growth.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Equity release allows homeowners aged 55+ to access cash from their property without selling it. The most common form is a lifetime mortgage, where you borrow against your home and the loan plus rolled-up interest is repaid when you die or move into long-term care. The maximum you can borrow depends on your age and property value, typically 20-60% of the home's value.
Interest on a lifetime mortgage compounds because no monthly payments are made. At a rate of 6%, a £100,000 loan doubles to £200,000 in approximately 12 years. All plans regulated by the Equity Release Council include a no-negative-equity guarantee, meaning you or your estate will never owe more than the property's sale value.
This calculator projects the loan balance at different time horizons, showing how compound interest grows the debt. Enter your age, property value and amount you wish to release to see the projected debt, remaining equity and the impact on your estate for inheritance purposes.
What is equity release? Releasing tax-free cash from your home while continuing to live there. Two products: (1) Lifetime mortgage (95%+ of market) — interest accrues, repaid when you die or move into care. (2) Home reversion (rare) — sell part of home to provider at below-market price, keep right to live there. UK market 2025: £6+ billion released annually (Equity Release Council). Average release: £100,000. Available age 55+ for lifetime mortgages; 65+ for home reversion.
UK equity release interest rates 2026. 6.0-7.5% typical (fixed for life, no monthly payments). Compounds annually. £100,000 released at 6.5% over 20 years = £352,000 debt. £100k at 5.5% over 25 years = £382,000. No payments required — debt grows. Some plans allow voluntary payments (5-10% capital/year without penalty), keeping debt manageable. Modern plans (post-2014 Equity Release Council standards): No Negative Equity Guarantee (NNEG) — never owe more than property is worth.
Alternatives to equity release. (1) Downsizing: typically frees £80-£150k tax-free in UK (selling 4-bed family home, buying 2-bed flat/bungalow). No interest compound, lower running costs, but emotional/logistical disruption. (2) Family loan: cheaper than market rate, complicated relationships. (3) Retirement Interest-Only (RIO) mortgage: monthly interest payments, debt fixed at original amount — but requires monthly income to qualify. (4) Drawdown lifetime mortgage: release as needed, interest only on drawn amount (cheaper than lump-sum). (5) Selling and renting: works if cash flow tight, but loses long-term housing security.
Impact on means-tested benefits and inheritance. Cash from equity release counts as capital for: Council Tax Reduction, Pension Credit, NHS care home funding (£23,250 capital threshold means you pay full care costs). May LOSE benefits worth £1,000s/year. Inheritance: equity release reduces estate value dramatically. £100k released at 6% over 20 years = £321k debt = £321k less inheritance for children. Some plans allow 'inheritance protection' — guarantees minimum % of property value to estate (in exchange for higher interest rate). Discuss with family before proceeding.
Equity release process and costs. Mandatory advice from FCA-regulated equity release adviser (£1,500-£3,000 fees). Solicitor fees £900-£1,800. Valuation: included or £200-£500 extra. Application/setup fees: £500-£1,500. Lender's medical report on house occupants. Cooling-off period: 7 days after completion. Members of Equity Release Council follow strict standards: NNEG, transparent fees, right to move home. Avoid unregulated providers. Major lenders: Pure Retirement, Aviva, Just, Legal & General, More2life. Use specialist broker (Age Partnership, Key Group, SunLife) for whole-market quotes.
Example: Age 68, £350,000 home, releasing £80,000
- Amount released: £80,000 at 6.0% interest
- After 10 years: debt grows to £143,300
- After 15 years: debt grows to £191,700
- After 20 years: debt grows to £256,600
- Remaining equity (20 years, assuming 2% house price growth): £520,700 − £256,600 = £264,100
Source: FCA — Equity release
Frequently Asked Questions
- What is equity release?
- Tax-free cash from your home while continuing to live there. Two products: (1) Lifetime mortgage (95%+ of market) — interest accrues, repaid when you die or move into care. (2) Home reversion (rare) — sell portion of home below market value, keep right to live there. UK market 2025: £6+ billion released annually. Average release: £100,000. Available age 55+ (lifetime mortgage); 65+ (home reversion). Cheaper alternatives often better: downsizing, family loan, RIO mortgage.
- How much does equity release cost?
- Interest rates 6.0-7.5% typical 2026, fixed for life, no monthly payments. Compounds annually. £100,000 released at 6.5% over 20 years = £352,000 debt at end. £100k at 5.5% over 25 years = £382,000. Modern plans (post-2014 Equity Release Council standards): No Negative Equity Guarantee — never owe more than property is worth. Setup costs: adviser £1,500-£3,000; solicitor £900-£1,800; lender fee £500-£1,500.
- Alternatives to equity release.
- (1) Downsizing: typically frees £80-£150k tax-free; no interest compound; lower running costs; emotional disruption. (2) Retirement Interest-Only (RIO) mortgage: monthly interest payments, debt fixed at original — needs monthly income to qualify. (3) Drawdown lifetime mortgage: release as needed, interest only on drawn amount (cheaper than lump-sum). (4) Family loan: cheaper but emotional/legal complications. (5) Sell and rent: works if cash flow tight but loses housing security.
- Impact on benefits and inheritance.
- Cash from equity release counts as capital for: Council Tax Reduction, Pension Credit, NHS care home funding (£23,250 capital threshold means you pay full care costs). May LOSE benefits worth £1,000s/year. Inheritance: equity release dramatically reduces estate value. £100k released at 6% over 20 years = £321k debt = £321k less inheritance. Some plans offer 'inheritance protection' — guarantees minimum % to estate (in exchange for higher interest rate). Discuss with family BEFORE proceeding.