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Equity release

  • Equity release lets you unlock some of the tax-free funds from your home

  • It's one way to help take control of your later life finances

  • Find out more about the benefits, drawbacks and costs of equity release

Am I eligible?

You could be eligible if you're:
  • A UK homeowner aged 55+
  • With a property worth £70,000+
Calculate now
Equity Release explained video backdrop

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's 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.

So, what’s different about Key?
Because Key takes a personal and honest approach to equity release, it's good to know we can answer all your questions in a way that's right for you. By ordering our free expert guide, using our free online calculator, or by calling us.

Key - equity release that’s right for you.
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Key's award-winning equity release service

Why choose Key?

  • Equity Release Adviser of the Year 2023 (Moneyfacts)

  • We're regulated and a member of the Equity Release Council

  • Rated Excellent on Trustpilot

Our equity release comes with:

  • Access to tax-free funds from your home

  • Option to make no monthly payments

  • Competitive interest rates

ⓘ We'll explain to you:

  • The benefits, drawbacks and costs of equity release
  • How equity release is a lifetime commitment
  • Your other later life finance options
Trustpilot
Trustpilot

What is equity release?

Equity release is a way to access some of the tax-free funds from the value of your home. It can help you take control of your later life finances.

Watch our video to find out more about Key's equity release and see if it could be an option for you.

❮

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. 

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's 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. Find out how much you could release with our free calculator.

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.

So, what’s different about Key?
Because Key takes a personal and honest approach to equity release, it's good to know we can answer all your questions in a way that's right for you. By ordering our free expert guide, using our free online calculator, or by calling us.

Key - for the life in later life.

What can I use equity release for?

The money you unlock through equity release is tax-free. You can use it in several ways, such as:

Repay your existing mortgage
Support your loved ones
Boost your retirement finances
Make home improvements

Equity release could help you live the later life you want. See how much you could release from your property with our quick and easy calculator.

Calculate now

How does equity release work?

Equity release is available to UK homeowners aged 55 or over. There are four types of equity release available with Key in the UK and they work in different ways.

Lifetime mortgage

  • For homeowners aged 55+ with a property worth £70,000+
  • A loan secured against your home
  • Release some of the tax-free funds from your home's value
Find out more

Payment-term lifetime mortgage

  • For homeowners aged 55-62 with a property worth £125,000+

  • You could unlock more than a comparable lifetime mortgage

  • Mandatory payments until oldest applicant turns 66

Find out more

Interest-payment lifetime mortgage

  • For homeowners aged 55+ with a property worth £99,000+

  • Reduced cost of borrowing with monthly interest payments

  • Receive an interest rate discount

Find out more

Home reversion

  • For homeowners aged 65+
  • Sell all or part of your home for a tax-free cash lump sum
  • Available through Key Group
Find out more

With Key's range of lifetime mortgages, you could access the funds you need now and still own your home. There are usually no monthly repayments to make. The loan, plus compound interest, is usually repaid through the sale of your property. This is generally when the last remaining applicant on the deeds passes away or moves into long-term care.

You can only release equity through a qualified adviser who'll make sure:

  • You only borrow what you need
  • You understand how the product works
  • It's right for you - if it's not we'll tell you

You have two options when it comes to releasing your funds with a Key lifetime mortgage.

Lump sum
With a lump sum lifetime mortgage you release tax-free funds from your home as a single amount.

You may get a lower interest rate compared to a drawdown option, but compound interest will roll up on the money you’ve released. You'll end up owing more if you take all your available funds in one go.

You'll have a fixed interest rate for the life of your mortgage, but you can’t release more funds unless you apply for a further advance (subject to advice fees, the lender’s criteria, your age and your property’s value at the time of application). Further advances aren't guaranteed.

Drawdown
A drawdown lifetime mortgage lets you release your tax-free money in smaller amounts after an initial lump sum.

A drawdown lifetime mortgage is more flexible than a lump sum plan. You can release money when you need it. A drawdown option isn't guaranteed. Your lender may have the option to withdraw your drawdown facility.

You could save a lot in interest as it only grows on the funds released. If you choose to make a drawdown, the funds will be subject to the fixed interest rate at the time. This may be higher than your original rate.

In 2023, Key customers could release an average of £78,334 from their homes (Key Market Monitor, 2023).

Some points to consider:

  • You'll need to release at least £10,000

  • The older you or your partner are, the more money you may be able to release (based on the age of the youngest applicant)


Your release amount is personal to you
The amount of equity you could release is based on your age, health, lifestyle and property's value. Our free calculator shows how much you could release.

Benefits and drawbacks of equity release

Watch our video to learn more about the benefits and drawbacks of equity release and see if it could be right for you.

Our equity release advice relates to Key's range of lifetime mortgages only - loans secured against your home.

❮

Transcript

What are the benefits and drawbacks of equity release?

Like any financial product, equity release has potential benefits and drawbacks to weigh up.

Benefits

  • Tax-free cash: You can unlock cash from your home, tax-free, to help meer your needs in later life

  • Stay in your home: You'll retain full ownership of your home and can stay in it for as long as you wish

  • Reduced or no monthly repayments: You can make reduced or no monthly repayments with a lifetime mortgage. This applies to a payment-term lifetime mortgage after the oldest applicant turns 66, and overpayments can be made at any time, subject to criteria

  • No negative equity guarantee: You'll never owe more than your home's worth or pass on any equity release related debt to your family, provided terms and conditions are met

  • A payment-term lifetime mortgage: Could allow you to unlock more of your home's value at a lower interest rate than a comparable lifetime mortgage


Drawbacks

  • The interest can build up quickly: Lifetime mortgages and payment-term lifetime mortgages are loans secured against your home and are subject to compound interest, meaning the amount you owe can grow quickly

  • Reduced value of estate: Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits

  • Long term financial product: These are long-term financial products and are not designed to be repaid early. If you do, early repayment charges may apply

  • Reduced or no property equity: Equity release may leave you with limited or no property equity remaining and will reduce your financial options in the future

  • Mandatory payments: There's a period of mandatory payments with a payment-term lifetime mortgage, and your home may be repossessed if you don't keep up with these payments

We only recommend equity release if it's right for you

You have to receive qualified advice before taking out equity release, so you can be sure it's the right decision for you

All our equity release advice relates to Key lifetime mortgages and payment-term lifetime mortgages only - loans secured against your home.

Our fixed advice fee of £1,299 is only payable on completion. Equity release will reduce your estate's value and may affect your entitlement to means-tested benefits.

A lifetime mortgage or payment-term lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future.

What interest rates are available for equity release?

Lifetime mortgage interest rates vary depending on your plan and circumstances. They're fixed for the life of the equity release plan.

Representative example

5.79% AER

Lowest rate with Key

6.54% AER

Rate most Key customers received, or less

6.74% APR

Overall cost for comparison

Rates correct from 15th July 2024. Based on customer data from the last 60 days, apart from Key's lowest rate. Interest rate received and plan features are subject to eligibility. Ask for a personal illustration.

  • AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest compounded each year.

  • APR stands for Annual Percentage Rate. It's the cost you pay each year to borrow money, including fees, expressed as a percentage.

Our equity release UK calculator will give you an idea of how much you could release. Your equity release adviser can give more information on interest rates.


Calculate now

Is equity release safe?

Watch our video to find out about the safeguards and protections Key lifetime mortgages come with.

All our plans meet the Equity Release Council standards. They have several protections, including:

You always own your home

You could unlock thousands tax-free to help fund your later life and you'll still own your home. This applies to a payment-term lifetime mortgage after the mandatory payment term ends when you turn 66.

Downsizing protection

Downsizing protection typically applies after five years of taking out your plan. If you need to move home but your new property doesn't meet the lender's criteria, you can repay your loan in full without an early repayment charge.

No negative equity guarantee

This means you’ll never owe more than your home is worth. A lifetime mortgage may leave limited or no equity in your property and will reduce your future financial options.

Plans tailored to your needs

Your adviser will search for the most suitable plan with specific features and protections. This makes sure your plan is right for you.

Equity release is regulated.

As an Equity Release Council member, we only recommend plans that meet its standards. These come with a range of safeguards and protections.

Our equity release advisers have specialist qualifications, putting you in safe hands.

More on equity release protection

 

Why choose Key as your equity release adviser?

Key is a specialist, award-winning later life mortgage provider for the over 55s. We've helped over a million customers see if equity release was right for them. After we take the time to understand your needs, we'll recommend the right later life option for you.

Trusted award-winners

We've won 80+ awards and are rated 'Excellent' on Trustpilot with 17,000+ reviews. This makes us the UK's most trusted equity-release specialist.

We're regulated experts

Key is regulated and a proud member of the Equity Release Council.

Covered by the FSCS

Equity release advising and arranging is covered by the FSCS, so you'll be protected by up to £85,000.

Customer stories

Don't just take our word for it - see what our customers are saying...

Michael and Carol

64 & 63, approaching retirement

"All the worries and the stresses have gone now. We can just look forward to having a nice relaxing retirement…We’re planning to go away on a couple of cruises."
Read more on Michael and Carol

Watch more of our customer stories

Next steps to release equity from your home

Use our free calculator

Check your eligibility and how much cash you could release with our equity release calculator.

Use our calculator

Speak to an adviser

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

Book now

Is equity release right for me?

Download your free, comprehensive guide today to see if equity release is right for you.

Download now

Your other options with Key
If another product is more suitable, we'll refer you to a different adviser within Key Group to help. If you go ahead, you'll only be charged the same £1,299 advice fee you'd pay with us, even if their fee is usually higher. Key offers alternatives to equity release such as a retirement interest-only mortgage or retirement repayment mortgage.

Other options to think about
It's important to know your other options before going ahead with equity release. These include: downsizing, unsecured lending, using existing assets, or support from friends or family.

Equity release FAQs

"The decision to release equity from your home is a big one. We know you may still have some burning questions, too, so here are the answers to the queries that we get asked the most." - Rachel East, Key Divisional Head of Advice

With a lifetime mortgage, the interest accrues, then rolls up and adds to the loan. This is also known as compound interest. The interest rate you get will be specific to your circumstances and fixed for the life of the loan.
 

  • The interest rate when your plan starts determines how quick interest grows. This will impact the total cost of borrowing over the term of the loan.

  • During the first period the interest is charged and added to the original loan amount. Following this, the interest is then calculated and charged on what you owe at the time. This is the original loan plus interest, not just the amount you initially borrowed.

  • This means a larger amount of interest adds to your lifetime mortgage each period. This cycle continues until the plan ends.

The interest is added either monthly or annually depending on your plan. There are ways you could reduce the total cost of borrowing of your lifetime mortgage.
 

ⓘ Illustrative example

Illustrative purposes only. It uses the average release amount of £82,475 and monthly equivalent rate (MER) of 6.3% – Key Market Monitor H1, 2023. Average UK house price of £288,000 – ONS, August 2023.

 
Year Balance at start of year Interest (6.3% MER)¹ Balance at end of year² Remaining property equity³
1 £82,475 £5,349 £87,824 £200,176
2 £87,824 £5,695 £93,519 £194,481
3 £93,519 £6,065 £99,584 £188,416
15 £198,778 £12,891 £211,669 £76,331
20 £272,153 £17,649 £289,802* £0


* The end of year balance is higher than the property's value. You'll never owe more than your home's worth, though, with a Key lifetime mortgage. This is the no negative equity guarantee.

¹ The rate at which interest adds to the loan – in this case, monthly (MER). All Key lifetime mortgages have a fixed interest rate for life. This column shows how much interest has added to the loan that year.
² How much is owed at the end of the year, including compound interest.
³ The difference between your property value and your outstanding lifetime mortgage balance.

You could save thousands over the course of your plan with a drawdown lifetime mortgage. This is because you only pay interest on the funds you release. Future drawdowns are subject to interest rates when you drawdown - not your original rate.
 

ⓘ Illustrative example

Illustrative purposes only. It uses the average release amount of £81,703 and monthly equivalent rate of 6.74% (future drawdowns will be charged at the prevailing interest rate) - Key Market Monitor Q1, 2023.

 

Mrs Lewis and Mr Davies both released £81,703. They took it in different ways to meet their needs. Over the same 15-year period, with the same total release, Mr Davies saved almost £32,851 in interest compared to Mrs Lewis.

Lump sum case study, Mrs Lewis

  • Mrs Lewis took her £81,703 in one go

  • Interest was charged on the full release from day one (monthly rate of 6.74%)

  • Total cost of borrowing after 15 years: £223,915


Drawdown case study, Mr Davies

  • Mr Davies took an initial loan of £51,703 from his facility

  • He took two £15,000 drawdowns in year 5 and 10 - interest was only charged when the funds were released

  • Total cost of borrowing after 15 years: £191,064

The cost of equity release depends on a few factors, like your plan and provider. There are four initial fees you may need to budget for (if applicable to your plan):

  • Surveyor's valuation: Usually paid with the application

  • Solicitor's fees: Usually paid when you receive your tax-free funds on completion

  • Lender's application fee: Usually paid when your plan begins, and you receive your tax-free funds

  • Our fixed advice fee: Our fixed advice fee of £1,299 is only payable on completion

To take out an equity release plan with Key, you must be a UK homeowner:

  • Aged 55+ (including all joint applicants)

  • With a property worth £70,000+
     

ⓘ Did you know...

If you're not eligible now, try our later life mortgage finder. We could still help you take control of your later life finances.

Find out if you could release more funds with your current plan. You could switch to a different one which may suit your needs better. Your equity release adviser will check if early repayment charges will apply.

If you're looking to switch to us or want to discuss your existing equity release plan, we're here to help.

Existing Key customer
Call us on 0808 252 9170 to talk about your plan

Switch to Key
Call us on 0808 252 9170 to switch to Key

Lines open Mon-Thursday 9am-8pm, Friday 9am-5.30pm and Saturday 9am-5pm.

Yes, you can move home if you have released equity from it, as long as the new property meets our lending criteria. Your lifetime mortgage can move to your new home. You might have to pay some of the funds back if the maximum loan available on your new property is lower than the outstanding balance of your existing lifetime mortgage. Your equity release adviser can help with your options if you want to move home.

You should consider early repayment charges
A lifetime mortgage is a lifetime commitment. Repaying early may mean having to pay early repayment charges. Our early repayment charges are fixed so that you know exactly what to expect.

You have the option to repay early
Our flexible features do give you the option to make voluntary, ad-hoc payments. This is between 10-12% of the initial amount that you borrowed each year. This reduces the size of the loan on which you're charged interest. Making repayments means you'll repay less overall.

Speak to your equity release adviser
Your adviser can explain how early repayments work. They can help you to make informed decisions on what's right for you at the time.

Unless you move into long-term care, your lifetime mortgage usually ends when you or the last remaining applicant pass away. At this point, your home will usually be sold. The proceeds are then used to repay the lender, with anything left over going to your estate.

If you go into long-term care and the lifetime mortgage plan is in your sole name, your home will typically be sold. This is to repay the loan and its interest. If your plan is in joint names, your plan will end when the last person passes away or goes into long-term care.

In the first situation, any money left over from the sale of your home could go towards paying your care costs. You can also use the funds that you release from your home to pay for care costs and home adaptations. This may help you stay in your home for longer.

None of our equity release plans will see you owe more than your home is worth. There's no risk of passing on any equity release debt to your loved ones. It's important to note that there may be limited or no property equity remaining.

Read our equity release articles

Equity release isn't something you should rush into. Read our RetireWise articles to learn more about how it works and if it's right for you.

How does equity release work?

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How long does equity release take?

Continue reading

Is equity release safe?

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Page last updated: Tuesday 21 May 2024

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