How is intrest calcalated for equity release

russjacks

If we were to get £20,000 in equity release how would the intrest add up.
Is there a calculator somewere we could use.

I suspect its (example) 5% 20,000 = 1000 total 21,000 after first year, then 5% on 21,000 for the second year and so on, is this correct, or is it 5% on 20,000 every year.

Many thanks

Russ

EdInvestor

russjacks wrote: »

I suspect its (example) 5% 20,000 = 1000 total 21,000 after first year, then 5% on 21,000 for the second year and so on, is this correct

That's correct, it compounds up. The best arrangement is to negotiate the total amount you want to release, but then only draw it down when you need it, that way the interest will roll up much more slowly.