Compound interest calculator

Are you considering equity release as a way to unlock funds tied up in your home?

If so, it’s important to understand how equity release works and the costs involved.

One important factor to consider is compound interest, which can significantly impact the amount owed over time.

Our equity release compound interest calculator can help you estimate the costs of your loan over time, taking into account compound interest.

Simply enter your loan amount and interest rate, and the calculator will provide an estimate of your potential costs.

By using our calculator, you can make informed decisions about your financial future and explore different repayment options.

What is Compound Interest and How Does it Apply to Equity Release?

Compound interest is the interest that accrues on the principal loan amount and any previously accrued interest.

This means that the amount of interest owed can grow exponentially over time, making it a key factor to consider when taking out any loan, including an equity release plan.

When you take out an equity release plan, you receive a lump sum or regular payments in exchange for a portion of the equity in your home.

This means that the interest on your loan is charged on the loan amount, plus any interest that has already accrued. As time goes by, the interest adds up and the total amount owed can increase significantly.

For example, if you take out an equity release plan with an interest rate of 5% and borrow £50,000, after one year you would owe £52,500 in total.

This is because the 5% interest is calculated not only on the initial loan amount of £50,000, but also on the interest that has accrued over the year, which is £2,500.

Over time, the amount owed can continue to grow as interest continues to compound.

How Much Equity Can I Release?

If you’re also interested in finding out how much equity you might be able to release, use our free equity release calculator.

This tool helps you estimate the maximum amount of equity you can release from your home, based on your age, property type and value.

Using our calculators together, you can make informed decisions about your equity release plan and understand the potential costs and benefits.

Click here to try our equity release calculator and start estimating your potential equity release.