Equity Release Calculators Uncovered – Why Some Might Be a Ploy But Others Can Analyse Future Risks
There are many free equity release calculators available that show how much money you can squeeze out of your property. They are mostly related to lifetime mortgages whereby interest may be fixed and added onto the loan until the property is sold. These figures could easily be produced as a rate table. However retired home owners are more often concerned about the potential risks to their equity than the amount of money that may be available. There are in fact much more sophisticated equity release scheme calculators that can show different examples of risk related to the growing loan. Another type of remarkable calculator shows how a Lifetime mortgage compares to a Home Reversion scheme on a like for like basis. These tools show colour flow charts in addition to cash flow figures so you can see the potential future risks at a glance.
You are simply gathering information to build up enough knowledge about equity release schemes before contacting an independent specialist. At this stage you will be armed with enough facts to ask the right questions and Age calculator may already have researched most the right answers. Sorry I digress, back to the free calculators. In my humble opinion, it is suggested that they are not much better than chocolate Kettle. In fact you may have discovered that after keying in a couple of details, hey presto, up pops another box that first requires your contact details before giving you the answer. The reaction for many people may well be, “would I feel comfortable dealing with a company that uses this tactic?” In fact equity release websites could easily publish a simple table that provides the approximate percentage available of your property value according to your age or the the youngest age of a partner in the case of a couple. “Oh”, I here you say, “The calculator did not mention couples?” Only a few mention this point.
Just to give you a very approximate indication, the following maximum Lifetime mortgage amounts as a percentage of the value of your property might be at ages; 55 20% 60 25% 65 30% 70 35% 75 40% 80 42% 85 45% 90 47%. As you can see this is definitely not rocket science. But to get an accurate personal illustration you should talk to an independent equity release specialist.
Not all calculators are just ploy to get your private details, for instance a complimentary equity release risk calculator that shows you the different possibilities of risk to your equity at any time in the future would be of real practical value. After all, the main worry about a lifetime mortgage is the unknown risk of future house prices compared to the growing loan. Many of these lifetime mortgage schemes offer a rolled up fixed interest rate until the property is sold. Therefore compound interest calculations would show you the loan outstanding after a given number of years. But if your house does not increase in value, the accumulated interest will rapidly swallow up the remaining value (equity) that you still own in your property and perhaps hope to leave to your beneficiaries. In this instance, a calculator that allows you to select different examples of how your house value may increase over a chosen period compared to the increasing loan will be of immense value. Such a calculator could not be replaced by simple tables although you would need to enter accurate information provided by an independent equity release adviser. So this is a valid reason to enter your personal details if you are indeed ready to finalise your scrutiny of equity release schemes and make to make comparisons.