Compound Interest Calculator
Easy to use with no personal details required
When you take out an equity release (specifically a lifetime mortgage), the loan charges compound interest.
This interest can build up considerably over the plan’s term, so you must know what to expect.
Equity Release Compound Interest Calculator
| Year | Amount released | Annual Interest | Balance |
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How to use the calculator
Simply enter three key pieces of information:
Amount of equity released: For lump sum lifetime mortgages, this represents the one-time payment you receive at the start of your plan. For drawdown lifetime mortgages, input the total amount you anticipate releasing to estimate the maximum interest accrual.
Number of years: This refers to the duration, or term, of your lifetime mortgage. While it’s impossible to predict this accurately, you can input different terms into the calculator to compare how compound interest affects each scenario.
Interest rate: Enter the interest rate provided by your equity release provider. Some use an annual rate (which our calculator utilizes), while others use a monthly rate.
How does compound interest work in equity release?
Unlike typical loans, with equity release, the lender adds interest not only to the original loan amount but also to any interest already accrued.
This means that the total amount owed grows faster than with standard loans over time.
Furthermore, as interest payments are typically deferred during the loan term, the impact of compound interest becomes more pronounced.
However, the exact amount of interest accumulation is within your control, influenced by factors such as the loan size, interest rate (often fixed initially), and loan duration, providing you with a sense of reassurance and control over your financial planning.
We recommend visiting Equity Release Wise for the most current equity release rates.
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While we do not provide a quote or call-back service as our website is purely informational, we understand that some people do want an equity release quote.
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