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If you’re looking for ways to release funds from your home, you may be wondering “is equity release the same as a lifetime mortgage?”. Simply put, lifetime mortgages are the most popular form of equity release. It allows homeowners aged 55 and over to release tax-free funds tied up in their home. You can do it in two ways, either as a single lump sum or, following an initial release, in smaller amounts. The choice really is yours as to how you want the product to work for you.
So, how does a lifetime mortgage work? A lifetime mortgage is a loan secured against your home, it's typically repaid when you or the last surviving partner passes away or enters long-term care. You retain full ownership of your property and there are typically no monthly repayments to make, as the loan, plus roll up interest, is repaid when the plan comes to an end.
If a lifetime mortgage sounds like a financial solution you’d like to explore, first it’s important to check to see if you could be eligible. If you’re a homeowner aged 55 and over, you could release equity from your home!
It’s important to remember that you can’t take out a lifetime mortgage without taking advice first from a qualified equity release adviser - it’s a regulatory requirement. Our friendly and professional team are always on hand to answer any questions you might have, and to chat through the options available with you. So, whether you’re looking to release funds to take a once-in-a-lifetime holiday, pay for college or university fees or for something else, we could help you achieve your financial dreams at Key.
The amount you could release depends on things such as your age, health and the value of your home. With lifetime mortgages, you can take either a lump sum, where interest accrues on the full amount from day one, or following an initial release in a number of smaller amounts, known as a drawdown. This could save you thousands in interest if you don’t need all the money straight away. A member of our experienced team will be able to chat you through your options.
There are typically no repayments to make with a lifetime mortgage, as the loan, plus roll-up interest, is repaid when the plan ends. That's usually when you either pass away or move into long-term care. When you take out a lifetime mortgage, the interest accrues, then rolls up and is added to the loan. This is also known as compound interest. The tax-free funds you release through lifetime mortgages can be used in a variety of ways – see how our customers used theirs.
Your adviser can tailor and completely personalise your plan to make it suitable for your needs and wants – all depending on what’s important to you. For instance, with some of our plans, you can choose to guarantee an inheritance for your loved ones through inheritance protection. Find out more about this feature and leaving an inheritance.
Other features include the option to make capital repayments to reduce the overall cost of your plan, subject to criteria. And for added peace of mind, on some plans we can personalise your plan with downsizing protection so you can move home in the future if you need to. That usually comes into effect after you’ve had the plan for five years and if your new property doesn’t meet our criteria at the time, you can repay your plan without an early repayment charge.
As with any mortgage, what remains from the sale of your property after your plan has come to an end can be passed on as an inheritance. And because all of our plans meet the Equity Release Council standards, they all come with the no negative equity guarantee. That means you’ll never owe more than your home is worth, so you can’t pass on any debt accrued through equity release to your loved ones.
Annual interest rates from as low as 3.76% fixed for life with us. Most Key Equity Release customers have received a fixed annual interest rate of 3.70% or lower. The overall cost for comparison is 3.89% APR.*
*Lowest available rate correct as of 4 May 2022. All other stated rates correct as of 4 May 2022. Interest rate received and plan features are subject to eligibility. Ask for a personal illustration.
If you’re worried about a certain lifestyle choice or health problem affecting your chance of releasing equity from your home, then speak to your adviser about our enhanced equity release products. This type of lifetime mortgage plan could mean that you’re able to release more tax-free funds from your home.
In circumstances of poor health or by making certain lifestyle choices, you may be entitled to an increased lump sum or a lower interest rate. Your expert adviser will be able to take you through the options available to you.
Based on the health & lifestyle of the youngest borrower you may be eligible for an enhanced lifetime mortgage plan based on a number of factors, including but not limited to: