Equity Release Calculator UK

As of March 2026, equity release interest rates for lifetime mortgages typically range from approximately 6.0% to 7.0% MER (monthly equivalent rate). The lowest available rate was 6.30% MER for lump sum lifetime mortgages (source: Equity Release Wise, March 2026). The Equity Release Council reported an average APR of 7.24% in Q2 2025. Rates are typically fixed for the entire life of the plan, providing certainty about future debt growth.

Your individual rate depends on your age, property value, chosen lender, plan features (such as voluntary repayment options, drawdown facility, or inheritance protection), and health status. Enhanced plans for those with health conditions may offer lower rates in exchange for higher LTV. Rates change daily with gilt yields and base rate expectations — always obtain a personalised illustration when ready to proceed.

Compound interest is the biggest cost risk in equity release. With a roll-up lifetime mortgage (no monthly repayments), interest is added to the outstanding balance each year, and then interest is charged on the new, higher balance. At 6.5% annual interest, a £100,000 release doubles to approximately £200,000 after about 11 years and could reach £466,000 after 25 years — nearly five times the original loan.

Understanding this is critical: if you release equity at age 65 and live to 90, that's 25 years of compounding. Your home may be worth more in 25 years, but the debt could still have consumed most of the growth. The no negative equity guarantee protects your estate, but there may be little inheritance remaining. Taking a drawdown plan rather than a lump sum, or making voluntary repayments, can significantly reduce this impact. Use our calculator's projection table above to see year-by-year debt growth for your specific situation.

Yes — this is one of the most important considerations. Equity release can affect means-tested benefits including: Pension Credit; Housing Benefit; Council Tax Reduction; Universal Credit; and Attendance Allowance (if you spend the funds). If you release equity and hold the cash as savings, it will be counted as capital in means-tested benefit assessments. Many older homeowners on low incomes are eligible for Pension Credit but assume they have too much (because of property wealth) — property value alone does not disqualify you, but cash savings from equity release could.

Before proceeding with equity release, contact a free benefits adviser to understand the full impact. Age UK (0800 678 1602), Citizens Advice (0800 144 8848), and the Turn2Us benefits calculator can all help. If you would lose significant benefits, equity release may cost you more than it gives you.

Equity release reduces your estate value by the outstanding debt at the time of death. Whether anything remains depends on how much you release, how long you live, the interest rate, and how much your property appreciates. Some plans offer an "inheritance guarantee" or "inheritance protection" option, which ring-fences a fixed percentage (e.g. 10%–50%) of your property's value to always pass to your beneficiaries, regardless of how much compound interest has accrued — though this typically reduces the amount you can release initially.

For inheritance tax planning purposes, the outstanding equity release debt reduces the taxable estate — the loan balance is deducted from the property value before IHT is calculated. For high-value estates near or above the nil-rate band (£325,000) and residence nil-rate band (£175,000), this can reduce or eliminate an IHT liability, making equity release a useful estate planning tool in some circumstances. Seek specialist advice from a qualified estate planner.

A drawdown lifetime mortgage establishes a maximum borrowing facility (e.g. £100,000) but allows you to take funds in smaller tranches as you need them rather than all at once. Interest only accrues on the money you have actually drawn — the undrawn reserve facility earns no interest until accessed. This typically results in significantly lower total interest compared to taking the full amount as a lump sum on day one.

For example: taking £100,000 as a lump sum at 6.5% results in approximately £254,000 of debt after 15 years. Drawing £10,000 per year for 10 years (then stopping) on the same facility results in significantly less total debt. If you don't need immediate large lump sums (e.g. you want to supplement income or fund occasional large expenses), drawdown is usually the better choice. Major drawdown providers include Legal & General, Canada Life, Aviva, and Just Group.

For a lifetime mortgage (the most common type): you must be at least 55 (some providers require 60); your property must be in the UK, in good condition, and worth at least £70,000 (most lenders require £100,000+); it must be your primary residence; you must own it outright or have a mortgage that can be repaid from the released funds; and the property must be of standard construction (specialist lenders deal with unusual types such as listed buildings, thatched properties, and properties with short leases).

For joint applications, the age of the youngest partner is used to determine the maximum LTV. Home reversion plans typically require at least age 65. There are no income or credit checks for lifetime mortgages — unlike conventional mortgages, your ability to make monthly repayments is not assessed. Property in Scotland and Northern Ireland has fewer lender options than England and Wales.

Before contacting any commercial equity release provider, take these steps: (1) Use this calculator to understand the indicative amounts and compound interest implications. (2) Book a free MoneyHelper session (0800 138 7777) for impartial guidance on all options. (3) Check your pension income options — have you explored pension drawdown, annuity purchase, or SIPP drawdown? Use our Pension Drawdown Calculator and Annuity Calculator. (4) Check your benefits entitlement — Age UK (0800 678 1602) or Citizens Advice can do a free benefits check. (5) Speak to family members about inheritance implications — this decision affects them too. (6) Consult an FCA-authorised whole-of-market equity release adviser, confirmed on the FCA register and ideally a member of the Equity Release Council.