Equity Release Repayment Calculator — Slide to See Your Savings

Here's a question that keeps a lot of equity release customers up at night a few years after signing: could I actually do something about this balance before it gets away from me? Short answer — usually yes. This calculator shows exactly what that "something" is worth, in two parts: how much a regular repayment plan would actually save you over time, and what it would cost you in charges if you decided to clear a lump sum right now instead.

The reason this matters more than people expect comes down to one word: compounding. Leave equity release interest untouched and you're not just paying interest on what you borrowed — you're paying interest on the interest that's already piled up. Left alone for 15-20 years, that snowballs into a genuinely large number. Chip away at it with even modest repayments, and the difference by the end can be startling. This tool puts both halves of that story — the saving, and any penalty for acting on it — on the same page, so you're not guessing.

Rates on equity release plans in 2026 sit mostly between 5.8% and 7%, averaging around 6.5%, and they're fixed for the life of the plan — that part never changes on you. What does change, if you're not making repayments, is the balance itself: the interest gets added to what you owe, and from that point on, you're paying interest on that interest too. It's a small mechanical detail with a genuinely big consequence, which is why the numbers below might look steeper than you'd expect.

This example assumes a £100,000 loan at 6.5%, compounding annually, with no repayments at all. It shows why even a modest ongoing repayment — enough to cover some or all of the monthly interest — can make such a large difference to the final amount owed, and to how much equity is left in your home for you or your family.

Since March 2022, this bit has actually become a right rather than a favour: every plan meeting Equity Release Council standards has to build in a penalty-free repayment allowance, commonly up to 10% of what you originally borrowed, every year. What you do with that allowance is up to you:

• Pay the interest — covering some or all of the monthly interest charge stops the balance increasing at all.
• Make occasional payments — smaller, irregular repayments still slow the effect of compounding.
• Repay some capital — reducing the original loan amount directly, within your allowance.
• Use the annual allowance — repaying up to the set percentage each year without triggering a charge.

Exact allowances, minimum payment amounts, and whether unused allowance can be carried forward all vary by lender, so it's worth checking your own plan's terms and conditions or asking your adviser before setting up a regular repayment.

Go over that allowance in a given year, or decide to clear the whole loan before the early repayment charge window closes, and most plans will want something back for it — an early repayment charge (ERC) on whatever you've repaid above the free amount. Most lenders run this as a declining scale over the first 8-10 years or so, though a few use a "gilt-linked" method instead, tied to how gilt yields have shifted since you took the plan out — which, worth noting, can occasionally work out cheaper or more expensive than a simple percentage would.

This calculator applies this indicative scale to the amount you repay above your 10% penalty-free allowance. Real ERC scales, allowances and calculation methods vary meaningfully between lenders — some run for longer than 10 years, and gilt-linked charges in particular can occasionally exceed a fixed percentage scale — so always confirm the exact terms in your own illustration before repaying a lump sum.

An ERC isn't always inevitable. Equity Release Council standards carve out a handful of situations where the charge is waived completely, no matter which year of the plan you're in:

• Death — when the loan is repaid because the last remaining borrower has died.
• Long-term care — since May 2025, this also covers the last borrower moving permanently into long-term care, including some informal care arrangements with relatives, subject to medical certification.
• Downsizing protection — many plans let you sell up and move to a smaller, less valuable property penalty-free after a set number of years (often 1-3 years into the plan), even if you'd normally still be within the ERC period.
• Moving home generally — you can usually transfer (port) your lifetime mortgage to a new property that meets the lender's criteria without any ERC at all, since you aren't actually repaying the loan.

If there's one thing worth remembering above everything else on this page, it's this: any equity release plan that meets Equity Release Council standards comes with a no negative equity guarantee. In plain terms — you, or whoever inherits from you, will never owe more than the house sells for, full stop, even if compounding has pushed the paper balance higher than the property's actual value. It's arguably the single most important safety net in this whole market, and it's worth double-checking any plan you're looking at actually has it.

Worth keeping in mind too: equity release shrinks what's left in your estate, and it can knock into means-tested benefits like Pension Credit, Council Tax Reduction or Universal Credit if the cash you release sits in a bank account above certain thresholds. None of this is a reason to avoid it necessarily, but it's exactly why independent financial advice isn't a box-ticking formality here — it's genuinely there to catch things a calculator like this one can't.

Picture this: you released £100,000 five years back at 6.5%. Never touched it since, so today's balance already sits at roughly £137,000 — and if you leave it alone for another 15 years, that climbs to somewhere around £348,000. That's the "do nothing" path.

Now picture the other path: starting today, you put £200 a month toward it. Run that forward the same 15 years and the balance grows a lot more slowly — the calculator puts the saving somewhere in the region of £60,000 to £90,000 in interest, just from that one change. And you're not locked in either; nothing stops you adjusting or stopping if life gets in the way.

Say you also fancied clearing a £20,000 lump sum today, on top of the monthly repayments. £10,000 of that sits comfortably within your 10% penalty-free allowance (10% of the original £100,000), so only the other £10,000 gets assessed for a charge. Five years into the plan, working off an indicative 6% rate, that comes to roughly £600. Run your own figures through the calculator above rather than taking this example as gospel — your rate, timing and plan will all shift the numbers.

Official sources & further reading: read guidance at MoneyHelper, see standards from the Equity Release Council, and check regulated firms on the FCA register. Browse every tool on the mortgage calculators homepage.