What Is Equity Release And How Does It Work?

To safeguard your health, our expert equity release advice is now available over the phone, via video appointment or face-to-face, whichever is right for you. If you’re interested in finding out whether releasing equity from your home could benefit you, or you have any other questions, get in touch by filling out our online form or by calling us on 0800 531 6027.

What is equity release?

Simply put, equity release is a way for homeowners aged 55 and over to release some of the tax-free funds from their homes without having to move. It can play an important role in retirement funding, and the flexibility and safeguards that are built into plans allows thousands of homeowners to tap safely into some of their housing wealth, all without worrying about making monthly repayments.

It is an increasingly popular way for people in or approaching retirement to boost their ﬁnances.

To be eligible for equity release there are a number of criteria you’ll need to meet before you can apply. Although you need to be aged 55 and over to release funds from your home, the youngest homeowner must be at least 55 for you to qualify. You will also need to release a minimum of £10,000 and when thinking about the funds you want to release, it’s important to note that the maximum you can borrow will be based on the age of the youngest homeowner, their health and lifestyle, and the property’s value. You'll also need a minimum property value of £70,000. Essentially the older you or your partner are, the more money you could potentially borrow.

Key Equity Release offer lifetime mortgages only, the most popular type of equity release, which is a loan secured against your home.

Remember, you can’t release equity without getting expert equity release advice first, so get in touch with our team today to see which product suits you.

Find out how much you could release from your property by using our handy calculator.

Calculate now

Equity release explained

Transcript

When it comes to equity release, we all have questions.

What, for instance, is it exactly?
Equity release is a way for homeowners over 55, whose property is worth at least £70,000, to release tax-free cash from their homes. It is an increasingly popular way for people in, or approaching, retirement to boost their finances.

And will we still own our home?
Yes – and with Key’s plans you can stay in it for as long as you like.

Will we have to make monthly repayments?
No, not unless you want to. The loan, plus rolled-up interest, will be paid back when your plan comes to an end.

Could our family inherit the debt?
No – all of Key plans come with a ‘no negative equity’ guarantee, so you’ll never owe more than your home is worth and there’ll never be a debt for your family to take on.

How much can we release?
This depends on your age, how much your house is worth and your general health. On average, Key customers have had access to £90,000.

What do people usually use the money for?
Key customers spend the tax-free cash on many different things, such as repaying existing debts, travel and home improvements.

Is equity release safe?
Yes. You need to receive qualified advice before committing to equity release, which is exactly what you get from Key. We are members of the Equity Release Council and authorised and regulated by, the Financial Conduct Authority.

So, what’s different about Key?
Because Key takes a personal and honest approach to equity release, we can answer all your questions. We have helped more than a million people decide if equity release is right for them and if it’s not right for you, we’ll tell you. And if it is, then we’ll take the time to understand your needs so we can recommend the right solution for you. And, what’s more, all of our advice is free of charge.

OK, how do we find out more?
Try our free online calculator or order your free myth-busting guide, both of which you can find online at keyadvice.co.uk.

Key - equity release that’s right for you.

How does equity release work?

Key offer a couple of ways that you can release equity from your house which are discussed further below. It’s important to think about what features you’d like your adviser to include in your equity release plan. If, for example, you’d like our lowest interest rate available, or to release the highest amount of tax-free funds we could offer from your home, you can discuss this with your Key Equity Release adviser.

They’ll be there to guide you through the different features, and it’s crucial to note that this won’t affect your entitlement to make no monthly repayments or the no negative equity guarantee – which both come as standard with all of our plans.

We’ve made wondering “how does equity release work?” a thing of the past. You can release some of the tax-free funds from your home through Key Equity Release with a lifetime mortgage, the most popular form of equity release. A lump sum lifetime mortgage is essentially a loan that’s secured against your home, giving you access to a single lump sum of funds and you’ll still own your property.

A similar product that is available is a drawdown lifetime mortgage. Unlike a lump sum lifetime mortgage that gives you a one off lump sum, this product allows you to draw funds out in stages after taking an initial lump sum. Plus, you’ll only ever pay interest on the money that’s released. In the same way a lump sum lifetime mortgage works, a drawdown lifetime mortgage is also a loan that’s secured against your home and you’ll still own your property.

What are the different types of lifetime mortgages?

With two options available to you, it can be difficult to find the right one. Here, we’ve broken down each of our products for you, but your expert equity release adviser will be able to talk you through them in more detail to help you decide. You can release tax-free funds from your home with a lifetime mortgage, which is the most popular form of equity release. There are two types of lifetime mortgages:

Lump sum lifetime mortgage

A lump sum lifetime mortgage is a popular form of equity release. It allows you to release some of the tax-free funds that are tied up in your home. Available as a single lump sum, this type of loan is secured against your home. You do not need to make any monthly repayments because typically, the loan plus roll up interest, is repaid when the plan comes to an end. This is usually when you or the last remaining borrower, either passes away or enters long-term care.

Available for homeowners aged 55 and over
You retain full ownership of your home
No requirement to make monthly repayments
Use the money you release for a variety of purposes – including home improvements and university fees

Drawdown lifetime mortgage

A drawdown lifetime mortgage is a different type of lifetime mortgage that allows you to release an initial smaller lump sum followed by further amounts as and when needed. The interest is only charged on the funds you have released at the time, and therefore these plans could potentially save you thousands. As with a lump sum lifetime mortgage the loan is secured against your home, with no need to make monthly repayments because typically the loan plus roll up interest is repaid when the plan comes to an end.

Available for homeowners aged 55 and over
You retain full ownership of your home
No requirement to make monthly repayments
Use the money you release for a variety of purposes – including home improvements and university fees
Draw smaller amounts as and when you need to – potentially saving you thousands

See how much you could release

* Now you could access annual interest rates from as low as 2.50%, fixed for life with us. Lowest available rate correct as of 2 September 2021. All other stated rates are correct as of 2 September 2021. Interest rate received and plan features are subject to eligibility. Ask for a personalised illustration.

More on how much equity release costs

What are the benefits of lifetime mortgages?

With a lifetime mortgage, there are a number of benefits. Instead of making any monthly repayments, the interest accrued on your lifetime mortgage is added to the loan and rolled up. This is commonly known as roll-up or compound interest. The loan plus interest is then repaid when the plan comes to an end, which is usually when you, or the last remaining borrower, either passes away or enters long-term care.

Typically once this has happened, your house will then need to be sold and the equity release mortgage provider will take their money from the sale proceeds. Any remaining money will then go to you or your estate.

At Key, you get a no negative equity guarantee

All of our plans meet the Equity Release Council standards. This means all of our plans come with several assurances, including the no negative equity guarantee. With it, you’ll never owe more than your home’s worth. So, any debt you accrue through equity release can’t be passed on to your loved ones after you’ve gone, even if your house falls in value.

At Key, you could get protection for the future

With some of our plans, you can also choose to guarantee an inheritance for your loved ones through inheritance protection by ring-fencing a percentage of your property’s future value to leave to your family as an inheritance, subject to criteria. Speak to your dedicated adviser about this feature. And for your own peace of mind, your adviser could personalise your plan to include downsizing protection. It means that should you wish to move home in the future to a property that does not meet our lending criteria, you can repay your plan without any early repayment charges. Downsizing protection is only relevant after 5 years of taking a plan out.

Is equity release safe?

Many of our customers ask “is equity release safe?”. Regulation under the Financial Conduct Authority (FCA), whose main role is to protect customers and enhance the financial market’s integrity, means that equity release is safe for those who wish to explore this as an option.

We’re authorised and regulated by the FCA, and pride ourselves on the fact that all our processes and recommendations are clear, fair and not misleading to customers in any way.

How much could I release?

The amount of equity you could release is based on your age, general health and lifestyle choices, and the value of your property. In 2019, Key customers had access to an average facility of £90,374. The amount is subject to a number of factors, so why not use our calculator to get an idea of how much you could borrow.

Calculate now

How much does equity release cost?

All of our equity release advice relates to our range of Key branded products and is completely free of charge. So, you can speak to a member of our experienced team and find out if it's right for you without it costing you a penny.

Most Key Equity Release customers have received a fixed annual interest rate of 3.53% or lower. The overall cost for comparison is 3.70% APR.*

Ready to see if equity release is right for you?

With more than 20 years’ experience, Key has helped over 1 million people decide if equity release is right for them. So, you can be confident we’ll find and recommend the most suitable plan for you.

We’re one of the UK’s trusted equity release specialists. Our equity release advice is unique to you, delivered by qualified equity release experts, who will take the time to understand your needs. They’ll search our product range to ensure they recommend the right plan for you and support you every step of the way.

We’ll ensure you consider your options, including downsizing or using other forms of borrowing, and if releasing equity from your house isn’t right for you, we’ll tell you. There’s no pressure to go ahead. Your adviser will give you all the information you need about equity release for you to make an informed decision in your own time.

You may also have other options available. such as a retirement interest only mortgage.

Try our mortgage finder to understand your options.

Releasing some of the equity from your home is simple with Key. Usually taking around 8-12 weeks*, you can get started in these steps:

Find out if you're eligible - calculate here to find out
Speak to a qualified equity release adviser on a date and time that works for you - arrange your callback here
Talk to a solicitor
Receive your money and spend in a variety of ways

You can also request your free, comprehensive guide to equity release and find out if it's right for you by clicking here.

* Timescale cannot be guaranteed however this a typical time frame

Here to help every step of the way

From your first phone call to your tax-free funds being released, we’re with you every step of the way. And, if you decide to go ahead, you’ll have a dedicated case handler to support you throughout the rest of your equity release journey.

Use our free calculator

Find out how much tax-free cash you could release from your home now with our equity release calculator

Calculate now

Speak to an adviser

Book an appointment with a specialist equity release adviser at a time that's good for you

Book an appointment

Not sure what product is right for you?

To release equity from your home, this typically involves taking out a form of mortgage product. Our later life mortgage finder helps you consider your options.

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Answers to your equity release questions

We know you may still have some burning questions that need to be answered before you pick up the phone to us. It’s important you consider the options available and to make sure that equity release is right for you. Our experienced team have answered some of the more common questions we get asked, but if you can’t find what you’re looking for here, we’re only a phone call away.

Will I still own my home?

Yes, with our plans, you’ll still own your home and can stay in it for as long as you like.

Will I ever fall into negative equity?

No. All of our plans meet the Equity Release Council standards and come with the no negative equity guarantee, meaning you’ll never owe more than your home’s worth.

Can I move home if I have equity release?

Yes. All of our plans meet the Equity Release Council standards which means you can move home, subject to criteria.

Who handles the legal side of the process?

You'll need to appoint an independent solicitor to handle the legal side of the process to give you peace of mind.

Are there any restrictions on what I can do with the money released?

You can use it in a wide variety of ways – but think carefully about how much you need to borrow.

Can I still leave an inheritance for my family?

Yes, you can. Some of our plans guarantee that a set percentage of your home’s future value will be retained, subject to criteria.

Can I explore equity release if I still have a mortgage?

Yes, however, you will need to repay the mortgage either before the lifetime mortgage completes or by using the money released.

What happens when you die with equity release?

Your home will typically be sold once you, or you and your partner, in joint cases have died. The sale proceeds will be used to repay the amount you owe and any money left will go to your estate.

How is my home's value assessed?

Your property will be valued by an independent RICS registered surveyor so you can be confident of an unbiased opinion of your property’s worth.

What do people spend the money on?

The money you release is tax free, and Key customers use it for a variety of things, such as travel, home improvements and paying off their existing mortgage.

Are there other ways to release money from your home?

Key Equity Release offer advice on lifetime mortgages only, the most popular form of equity release – there are other ways to unlock money from your home. Home reversion plans include you selling all or part of your property to a reversion company for less than its market value to receive a cash lump sum. You won’t retain legal ownership of your home, but you can remain there rent-free for the rest of your life.

There may be other ways you could release money from your home, such as standard or retirement interest-only mortgages, your adviser will ensure you consider your options. If you want to explore any of these other options you would need to obtain alternative advice.

Things to consider

You have to get equity release advice before releasing tax-free cash from your home - please read all our information and make sure it’s right for you
Key Equity Release offer lifetime mortgages only, which is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits
All of our plans meet the Equity Release Council standards and come with several protections, including the no negative equity guarantee, which means you’ll never owe more than your home’s value

What our customers are saying

Found all very friendly and very helpful. Neil Bell was my first contact and was there all the way for me knowing l could phone him with any enquiries l had He was very knowledgeable and explained everything very clearly l can not rate him high enough.He made the hole journey a pleasant one. Would recommend key without a doubt to family and...

Anita June Amor

Apart from a few signatures, everything was done for us,by Key, including providing appropriate legal representation. All our requirements were achieved and the whole process was carried out quickly, efficiently and stress free. Our allocated agent, Leena Mistry, was highly professional but, at the same time, was also a very pleasant person to...

ANTHONY DRAYCOTT

Cannot recommend this service highly enough. It was painless from start to finish. Most efficient and friendly service. No fee and the best interest rate which I was quoted.

Kate

Great customer service that really can't be bettered! Bradley Stiff the local Key representative was extreamly product knowledgeable and exceptionally polite and very helpful. We feel the whole process was very smooth and no issues at all. Highly recommend Key.

Brian Lambert

Really helpful thank you to everyone that helped me though it

Dawn G

Page last updated: Thursday 16 September 2021

Equity release