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What is equity release and how does it work?

  • Read Key's definitive equity release guide

  • Unlock tax-free funds from your home

  • We'll explain the pros and cons

See what you could release tax-free

Use our calculator if you're:

  • A UK homeowner aged 55+
  • With a property worth £70,000+
Calculate now

What is equity release?

Equity release is a financial product designed for UK homeowners aged 55 or over. It allows you to access some of the value tied up in your property as tax-free cash, without needing to move. In simple terms, it’s a way to turn part of your home’s value into money you can use in later life.

What can I use equity release for?

The money you unlock through equity release could give you the freedom to spend it in a way that works for you. Some customers put it towards smaller needs, others on bigger plans, or even to give loved ones a helping hand.

While there are some restrictions, such as investments or buy-to-lets, you can use it in several ways, such as:

Repay existing mortgage

Support loved ones

Boost retirement finances

Make home improvements

Ready to get started?

Equity release could help you live the later life you want. See how much you could release tax-free with Key's award-winning equity release service.

Calculate now

ⓘ Be financially aware. Equity release comes with drawbacks which are important to think about.

How does equity release work in the UK?

Equity release works by letting you access some of your home's value as tax-free cash. Once your eligibility has been confirmed and your home has been valued, we'll let you know how much you can unlock.

Different types of equity release

In the UK, there are two main types of equity release: a lifetime mortgage or a home reversion. The type of equity release available to you depends on your age, property value and circumstances. While you have two options, we only offer equity release advice on lifetime mortgages.

Lifetime mortgage

  • For homeowners 55+ with a property worth £70,000+

  • Loan secured against your home

  • Usually repaid when the property's sold, after death or entering long-term care

More on lifetime mortgage

Home reversion

  • For homeowners 65+, minimum property value varies

  • Sell all or part of your home at below market value for a tax-free cash lump sum

  • Available through Key Group

More on home reversion

Pros and cons of equity release

Like any financial product, equity release comes with pros and cons. Key can help you understand both sides, with the points below focusing on the lifetime mortgages we recommend.
 

Equity release pros

Here's what people find helpful about equity release:

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

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

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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. Terms and conditions to be met.

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Reduced or no monthly repayments
You can make reduced or no monthly repayments.

Cons of equity release

These are things to keep in mind before you decide if equity release is right for you: 

Interest builds up quickly
A lifetime mortgage is a loan secured against your home. This builds up compound interest - the amount you owe grows fast.

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Reduce estate value
Equity release will reduce the value of your estate. It may affect your entitlement to means-tested benefits.

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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.

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Reduced or no property equity
Equity release may leave you with limited or no property equity. It will reduce your future financial options.

You can only release equity through a qualified equity release 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 they'll tell you

You have two options when it comes to releasing your funds with a lifetime mortgage: a lump sum or a drawdown. You can find out more in our lump sum vs drawdown guide.

Start your equity release journey with our free equity release calculator.

In Q1 2025, Key customers could release an average of £91,819 from their homes (Key Average Total Facility, Q1 2025).

  • 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)

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.

Explore our equity release guides and tools

Handy equity release tools

More on equity release

Proud member of the Equity Release Council


 

Learn more

Is equity release safe?

Equity release is designed with built-in safeguards to protect homeowners and their families. From clear costs to flexible features, these protections help ensure you know what you're signing up for. They help keep you in control of your decision. Some safeguards include:

Safeguards
All plans we recommend meet the Equity Release Council standards. This includes the no negative equity guarantee and the right to remain in your home for life.

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Authorised and regulated
Equity release is part of a regulated market. This means authorised providers must offer transparent communication and fair treatment of customers.

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Independent legal advice
You must get advice from an independent solicitor before the plan can go ahead. This gives you an extra layer of protection and peace of mind.

Is equity release safe? Cover image

Watch our video to see how you're protected with a lifetime mortgage we recommend.

Find out more in our "is equity release safe" guide.

Equity release is a big decision, so the right advice is essential. In the UK, you must receive regulated advice before taking out a plan. Only authorised and qualified advisers can recommend equity release.

At Key, we make this simple for you. We’ll connect you with a specialist adviser who understands your needs. They’ll explain how equity release works, check your eligibility, and guide you on whether it’s the right choice.

An equity release adviser will help you understand:

  • How equity release works

  • Whether you’re eligible

  • Whether it’s right for you

If you’d like to explore your options, request a free callback today. We’ll arrange a time that suits you.

Yes, equity release is regulated in the UK. This means all plans must follow strict rules to ensure homeowners receive suitable advice.

At Key, we’re authorised and regulated too. Our equity release advisers hold specialist qualifications and provide advice that’s clear, fair, and tailored to you.

Simple. Personal. Transparent.


Key helps you understand all equity release costs to put you in control from the start

What does equity release cost?

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 completes, and you receive your tax-free funds

Our fixed advice fee

  • Our fixed advice fee of £1,699 is only payable on completion

What interest rates are available for equity release?

Lifetime mortgage interest rates aren't one-size-fits-all. They vary depending on your plan and circumstances, but they're fixed for the life of your equity release plan. Knowing what's available helps you understand if it could be an option for you.

Rates correct from 13th October 2025. 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.

Representative example

6.41% AER

Lowest rate with Key

7.22% AER

Rates most Key customers received, or less

7.55% APR

Overall cost for comparison

  • 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

You should consider early repayment charges
A lifetime mortgage is a lifetime commitment. Repaying early may mean having to pay early repayment charges. These charges are fixed on the equity release plans we recommend so you know exactly what to expect.

You have the option to repay early
We recommend equity release plans with flexible features which give you the option to make voluntary, ad-hoc payments. This is between 10-15% of the initial amount that you borrowed each year depending on the plan. 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.

Many lifetime mortgage plans in the UK give you ways to manage the interest . Depending on your plan, you may be able to:

  • Make voluntary payments: You can pay off some of the interest or capital. Interest will still build up, but payments can reduce the total amount you owe. This applies to both interest-payment lifetime mortgages and payment-term lifetime mortgages.

  • Use drawdown options: Instead of taking all the money at once, you can take an initial lump sum and release more when you need it. This helps limit interest, as it only starts when the money is released. Drawdowns depend on the interest rate at the time and are not guaranteed.

These features can help lower your cost of borrowing and give you more control over your home’s equity.

Did you know...
An interest-payment lifetime mortgage could help certain homeowners reduce borrowing costs. You get an interest rate discount if you stick to monthly interest payments. Available to UK homeowners aged 55+ with a property worth £99,000+.

More on interest-payment lifetime mortgage

Learn more about releasing equity costs

Managing equity release costs

More information on costs

Our promise


If equity release isn't right for you, we'll tell you

Is equity release right for you?

Equity release isn't right for everyone. We've helped over a million people see if equity release was right for them. If it isn't right for you, we’ll tell you. In the meantime, you can read our useful guide if you’re wondering whether equity release is right for you.

Am I eligible for an equity release mortgage?

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

  • Aged 55+ (including all joint applicants)

  • With a property worth £70,000+

Eligibility Checker

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-Thurs 9am-8pm, Fri 9am-5pm, Sat - Sun closed.

Releasing equity from your home may affect means-tested benefits. These include Pension Credit, Council Tax Support, and other entitlements based on your income or assets.

You won’t pay capital gains or income tax on the cash you release. But having more money could reduce your benefits or make you ineligible. Each benefit and local authority has its own rules. It’s vital to check how your plans might affect you before going ahead.

This is why it’s so important to speak with a qualified and regulated equity release adviser. They can look at your full financial situation. That includes how much you want to release, whether you take it as a lump sum or drawdown, and how it may affect your benefits now or in the future.

Equity release is the right option for some people. But the impact on means-tested benefits is something you must consider. Personalised, regulated advice will help you understand both the benefits and the risks, so you can make the right choice with confidence.

For more information, read our guide on how equity release affects tax, or our guide on myths and worries about equity release.

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 never be charged more than our standard fixed advice fee of £1,699, even if their fee is higher. Key Group 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.

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

Free equity release guide

There are different types of equity release which help thousands of UK homeowners take control of their retirement finances.

For more information on your retirement options, read our free, comprehensive guide today.

Read now

Join the 1 million+ we've helped with equity release

Why choose Key Equity Release?

Key is a specialist, award-winning equity release provider for the over 55s. We could help turn your property wealth into a way to support your retirement. We research all later life mortgage options and provide trusted, expert advice that's personal to you.

Trusted

  • We've won 80+ awards 

  • We're rated 'Excellent' on Trustpilot with 17,000+ reviews

  • We're the UK's most trusted equity-release specialist

Expert

  • Key is a regulated equity release expert

  • We're proud members of the Equity Release Council

  • We've helped 1 million+ see if it was right for them

Protected

  • Equity release advising and arranging is covered by the FSCS

  • You'll be protected by up to £85,000

  • Key could help you access some of your home's equity in a safe and transparent way

Key customers giving testimonial

Customer stories

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

Michael & 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."

Trustpilot

Trustpilot

How 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

Download free equity release guide

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

Download now

We're here to help you

Our friendly equity release team is available: Mon-Thurs 9am-8pm, Fri 9am-5pm, Sat - Sun closed.

Call free on 0808 252 9170 or book a call and we'll get in touch with you.

Page last updated: Tuesday 14 October 2025

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