Equity Release Calculator

Q: How much equity can I release from my home?

The amount depends on your age and property value. Loan-to-value ratios range from 20% at age 55 to 55% at age 85+. For a £300,000 property at age 70, you could release up to approximately £120,000. Health conditions may increase availability through enhanced plans. Any existing mortgage must be repaid first.

Q: How does equity release affect inheritance tax (IHT)?

Equity release reduces your estate value, which can lower IHT. The nil-rate band is £325,000 plus £175,000 RNRB for direct descendants, giving £500,000 (or £1,000,000 for couples). However, compound interest costs often exceed IHT savings. Released funds given away may still be subject to IHT if you die within 7 years.

Q: What is the difference between lump sum and drawdown equity release?

With a lump sum, you receive everything upfront and interest compounds on the full amount. With drawdown, you take an initial amount and keep a reserve facility. Interest only compounds on funds actually withdrawn, which can save tens of thousands over the plan's lifetime. Drawdown suits those who don't need all the money immediately.

Estimate how much equity you could release from your home, see how rolled-up interest grows your debt over time, and understand the impact on your family's inheritance. UK rates for 2025/26.

Estimate how much equity you could release from your home

Your age

Minimum age: 55 (some plans require 60+)

Property value

Current market value of your home

Existing mortgage

Outstanding mortgage balance (£0 if mortgage-free)

Show drawdown option?

Draw funds in stages to reduce interest costs

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How to Use This Calculator

How Much Can I Release? tab

Enter your age, property value, and any existing mortgage. The calculator estimates the maximum lump sum you could release based on age-related loan-to-value (LTV) ratios. LTV increases with age: from 20% at 55 to 55% at 85+. Expand "More options" to see a drawdown comparison, where you take an initial amount and keep a reserve facility for later.

Debt Growth tab

See how rolled-up interest compounds your equity release debt over time. Enter the amount released, interest rate, and projection period. The calculator shows your debt at year 5, 10, 15, and beyond, plus the remaining equity in your home assuming modest property growth. This helps you understand the true long-term cost of equity release.

Impact on Inheritance tab

Compare what your heirs would inherit with and without equity release. The calculator factors in property growth, compound interest on the debt, and inheritance tax (IHT) implications including the nil-rate band (£325,000) and residence nil-rate band (£175,000). Toggle the partner option to see transferable allowances.

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The Formula

Equity release uses compound interest with rolled-up (unpaid) interest added to the loan balance each year:

Maximum Release = Property Value × LTV% − Existing Mortgage

Debt after N years = Amount Released × (1 + Interest Rate)^N

Remaining Equity = Property Value × (1 + Growth Rate)^N − Debt after N years

IHT Payable = (Estate Value − Nil-Rate Bands) × 40%
NRB: £325,000 | RNRB: £175,000 (transferable between spouses)

The critical insight is that rolled-up interest compounds exponentially. At 6% interest, a £80,000 release becomes £191,295 after 15 years and £340,427 after 25 years. Meanwhile, property values typically grow at 2-3% per year, meaning the debt can eventually exceed the property value — though the no-negative-equity guarantee protects you and your heirs.

Choosing drawdown over lump sum can significantly reduce total interest, because you only pay interest on funds actually withdrawn. The reserve facility sits unused until needed.

Example

Margaret — Retired Teacher, 72, Dorset

Margaret owns her home outright, valued at £350,000. She wants to release equity to fund home improvements and supplement her pension income. She is single with two adult children.

How Much Can I Release? tab

Age72

Property value£350,000

Existing mortgage£0

LTV at age 7242%

Maximum release£147,000

Debt at age 85 (6%)£312,809

Debt at age 90 (6%)£418,610

Margaret decides to release £80,000 — well below her maximum — to keep the debt manageable and protect her children's inheritance.

Impact on Inheritance tab

Property in 15 years (2% growth)£470,886

Debt in 15 years (6%)£191,295

Net estate with equity release£279,591

Net estate without£470,886

Inheritance reduction£191,295

The £80,000 Margaret receives now costs her children £191,295 in future inheritance — effectively a £111,295 cost of borrowing over 15 years. However, the reduced estate may also lower the IHT bill, partially offsetting the loss.

FAQ

What is equity release and how does it work? ▼

Equity release allows homeowners aged 55+ to access the value (equity) tied up in their property without selling or moving. The most common type is a lifetime mortgage, where you borrow a lump sum (or drawdown) secured against your home. Interest rolls up (compounds) over time, and the loan plus interest is repaid when you die or move into long-term care, usually from the sale of the property. All plans approved by the Equity Release Council include a no-negative-equity guarantee, meaning you (or your estate) will never owe more than the property is worth.

How much equity can I release from my home? ▼

The amount depends primarily on your age and property value. Loan-to-value (LTV) ratios typically range from 20% at age 55 to 55% at age 85+. For a £300,000 property at age 70, you could release up to approximately £120,000. Health conditions can increase the amount available through "enhanced" or "impaired life" plans. Any existing mortgage must be repaid from the release, reducing the cash you receive. Most lenders require a minimum property value of £70,000 and minimum release of £10,000.

What are the current equity release interest rates? ▼

As of March 2026, equity release interest rates range from approximately 6.0% to 7.0% MER (monthly equivalent rate), with the lowest rates around 6.3% for lump sum lifetime mortgages. Rates are typically fixed for life, meaning they won't change regardless of base rate movements. Your individual rate depends on your age, property value, loan amount, and health. Drawdown plans may have slightly different rates. Always compare offers from multiple providers through an independent adviser.

How does equity release affect inheritance tax (IHT)? ▼

Equity release reduces the value of your estate, which can lower your inheritance tax bill. The IHT nil-rate band is £325,000, plus the £175,000 residence nil-rate band (RNRB) if you leave your home to direct descendants — giving a combined £500,000 threshold (or £1,000,000 for married couples). However, if you give away the released funds and die within 7 years, those gifts may still be subject to IHT. Equity release should not be used primarily as an IHT planning tool without professional advice, as the compound interest costs often exceed the IHT savings.

What is the difference between lump sum and drawdown equity release? ▼

With a lump sum lifetime mortgage, you receive the full amount upfront and interest accrues on the entire balance immediately. With drawdown, you take an initial amount and have a reserve facility to draw from later as needed. The key advantage of drawdown is that interest only compounds on the funds actually withdrawn, not the full approved amount. This can save tens of thousands in interest over the life of the plan. Drawdown is ideal if you don't need all the money immediately — for example, using equity release to supplement pension income over several years.

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