For many people over the age of fifty five, the possibility of qualifying for conventional mortgage or secured loans reduces dramatically. This is usually because of their age and potentially restricted income once they retire. However, equity release schemes have been specifically designed for this age group and they are designed to provide lifetime finance without prejudice for their income.
What are equity release calculators?
Equity release calculators are tools which are available online and offer confidential free information. They are pre-programmed to take the details supplied and apply it to the lending formula of the specific equity release provider to determine whether you would be eligible for the equity release mortgage or secured loans, and how much you could expect to receive with particular schemes. The equity release calculators ask a number of questions about your personal information including your age and gender and your property. This is to ascertain the amount of equity which is contained in your property and the anticipated duration for the equity release loan. There are a number of different equity release lenders and each will have their own criteria to determine whether your circumstances are suitable for equity release.
Some equity release calculators will also consider other factors such as your health status. There are a number of lenders who offer impaired life plans for those who have a history of poor health or a terminal condition. These tend to offer a greater percentage of equity release based on your expected lifespan being impaired by your medical condition.
Why are equity release calculators necessary?
Unlike conventional mortgage or secured loan where there is a specific formula to calculate the maximum loan possible, equity release criteria is different. Your property value is still important, but the products are designed to be a life long plan. Therefore the lender needs to anticipate the duration of the loan. The interest for the loan is usually compounded on to the balance annually and there are strict regulations which guarantee that equity release schemes will not cause an estate to inherit a debt from a property. This means that the lender cannot simply lend against the full amount of equity in the home. They need to anticipate the interest being compounded over a specific number of years and ensure that there is sufficient equity in the home to cover this. In the event that after the death of the home owner, there are excess funds available from the sale of the property, the remaining funds will be allocated to your beneficiaries through your estate in the usual manner.
Finding an accurate equity release calculator
There are a great many different types of equity release calculator which are available on websites of equity release providers and brokers. In order to obtain the most accurate results, it is important to use several different calculators. Ideally your chosen calculators should be from an independent broker, who has a wider access to products throughout the industry. Basic internet searches will reveal the websites with equity release calculators, but you should be wary of any calculator which insists on personal contact information. Using these may mean that you receive sales literature, calls and emails. Try to choose a calculator which offers more in-depth information including scheme details and interest rate illustrations. This will enable you to accurately compare the products which are best suited to your circumstances.
In order to obtain the most accurate results, you will need to ensure that the information you supply to the calculator is as up to date and accurate as possible. Under or over estimating the value of your property can have a huge impact on the accuracy of the maximum amount which can be borrowed. Therefore it is worth taking the time to double check your information including requesting an up to date balance on your current mortgage and using some independent property valuation websites to assess the current value of your home. Many of these types of website offer a great degree of accuracy based on the property sales which have completed in your area in the very recent past.
If you are interested in releasing equity from your home, an accurate equity release calculator can be an excellent starting point for equity release mortgage or secured loans. However, you must bear in mind that although these calculators can supply accurate information, they should not replace the expertise of specialist advise. You should always consult with a specialist adviser or broker before making the decision to proceed with an application. Professional advice will provide the assurance that equity release is the best solution for your requirements and that you are proceeding with the scheme which is best suited to your needs.
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