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Preston, PR2 9ZH

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Equity Release Glossary

We know equity release is a big decision to make and understanding all the facts and terminology is important to ensure you decide on what's right for you. To help you understand all the jargon that you may read when learning about the equity release process, we've created our handy A-Z glossary below. 

Use the alphabet below to navigate through the page index:


 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A


APR (Annual percentage rate) - The annual rate charged for borrowing, expressed as the actual yearly percentage.

Arrangement fee - An agreed fee that is paid when your equity release plan is completed

B


Beneficiary - A legal person or entity that would receive money or other benefits from an individual.
 

C


Compound Interest - Also known as roll up, this is interest that is added and paid on any interest accrued on a loan, as is the case with a lifetime mortgage.

D


Downsizing - The process of selling your home in order to move to a smaller property

Drawdown plan - A lifetime mortgage with the option to release smaller amounts, after taking an initial lump sum.

E


Early repayment charge - Dependant on your provider, you may be required to a pay an early repayment charge if you pay off all or some of your lifetime mortgage early

Enhanced plans - A type of lifetime mortgage with enhanced loan-to-values or preferential interest rates due to any qualifying health conditions and lifestyle choices

Equity - The market value of your home, less any outstanding loans or mortgages secured against the property

Estate - The collective term for everything in your ownership, such as your home, finances and possessions, when you pass away

F


Freehold - Outright ownership of the property and the land on which it is built

Financial Conduct Authority (FCA) - The UK's independent body which regulates the conduct of financial services firms and activities
 

H


Home reversion plan - A form of equity release where money is released by selling a part of or all of your home to a home reversion provider in exchange for a cash lump sum

I


Inheritance protection - A feature available with some lifetime mortgages that allows you to ring-fence a percentage of your property's future value as a guaranteed inheritance

Interest only mortgages - A type of mortgage where the customer only pays the interest on the capital borrowed

K


Key Facts Illustration (KFI) - An FCA required document in a set format, provided during the advice process, which helps customers to understand and compare the features and risks of prospective equity release plans

L


Leasehold - When the ownership of a property has a set duration, after which said ownership is returned to the landlord (sometimes known as "freeholder")

Lifetime mortgage - A form of equity release which is a loan secured against your home, meaning you retain full ownership of your property, and is designed to be repaid when the plan holder(s) pass away or move into long-term care

Loan-to-value (LTV)-  This figure represents the size of the loan amount expressed as a percentage in comparison to the value of the property

Lump sum - An amount of money released to the customer in a single amount

M


Means-tested benefits - Payments available to people where income and/or capital is demonstrated to be below government-specified limits

Mythbuster - Our articles aimed at dispelling common equity release myths

N


No negative equity guarantee - A guarantee with all Equity Release Council approved plans that you can never owe more than the value of your home, so no debts from equity release can be passed to your beneficiaries

P


Provider - A company which provides and finances the equity release plans that are sourced via your equity release adviser

Q


Qualified equity release adviser - Key Equity Release's fully qualified advisers specialising in equity release

S


Secured Loan - A loan that is secured by the lender against an asset you own, usually your home, that enables the lender to recover any outstanding debts if you cannot pay back the loan

Solicitor - A legal professional qualified to give legal advice and support

T


Tax-free - The money released from equity release is not usually taxed via either Income Tax or Capital Gains Tax, however it may affect your tax position overall

Trustpilot - A public consumer review website where customers can review their experiences with Key Equity Release and other businesses
 

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Equity Release Guide

Get the facts about equity release and see if it's right for you
  • Customer testimonials 
  • Get your questions answered
  • Explore the different plans available and see which one suits you

Things to consider

Your specialist equity release adviser will explain:

  • You have to get advice before releasing tax-free cash from your home. Please read all our information and make sure it's right for you
  • A lifetime mortgage, which is a loan secured against your property, is the most popular form of equity release and you’ll retain full ownership of your home
  • All of our plans are approved by the Equity Release Council and come with several protections, including the no negative equity guarantee, which means you’ll never owe more than your home’s value
  • Equity release reduces your estate's value and may affect any means-tested benefits you're eligible for