Enter the total equity in the home ($) into the Calculator. The calculator will evaluate the Release Equity. 

Release Equity Formula

RE = TE * .85

Variables:

  • RE is the Release Equity ($)
  • TE is the total equity in the home ($)

To calculate Release Equity, multiply the total home equity by .85.

How to Calculate Release Equity?

The following steps outline how to calculate the Release Equity.


  1. First, determine the total equity in the home ($). 
  2. Next, gather the formula from above = RE = TE * .85.
  3. Finally, calculate the Release Equity.
  4. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

total equity in the home ($) = 50,000

FAQs

What is home equity?

Home equity is the value of a homeowner’s interest in their home. It is the difference between the market value of the property and the amount still owed on its mortgage.

Why would someone want to release equity from their home?

People might want to release equity for several reasons, such as funding home improvements, consolidating debts, supplementing their retirement income, or making a significant purchase.

Are there any risks involved in releasing equity from your home?

Yes, there are risks involved, including reducing the amount of inheritance you can leave, affecting your entitlement to means-tested benefits, and the possibility of owing more than the value of your home if property values fall.

What is the significance of the 0.85 multiplier in the release equity formula?

The 0.85 multiplier in the release equity formula represents the portion of the total equity that can be released, typically up to 85%. This factor accounts for the lender’s need to manage risks associated with the loan.