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Lifetime mortgages

Unlock tax-free cash out of your home and retain ownership without the stress of moving. We'll explain the benefits, risks and costs of a lifetime mortgage

Am I eligible?

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

✓ What a Key lifetime mortgage comes with:

  • Option to make no monthly repayments

  • No negative equity guarantee 

  • Retain 100% home ownership

Calculate now

 We'll explain to you:

  • That this product is a lifetime commitment

  • The benefits, risks and costs before going ahead

  • Your other later life finance options

What is a lifetime mortgage?

A lifetime mortgage is a type of equity release and is a loan secured against your home. It allows homeowners aged 55 or over to release tax-free funds tied up in their home.

You always own your home

You keep full ownership of your property, so you could use this money now - to help loved ones or make home improvements for example - without having to sell your home.

Choose how you get your funds

You can release funds from your home in a lump sum or a series of smaller amounts following an initial release. There are also flexible features available, such as voluntary ad-hoc repayments. The choice is yours as to which of the features are suitable to you.

No monthly repayments

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 you want to reduce the long-term cost of your plan, you can make repayments of up to 10-12% without any early repayment charges.

How does a lifetime mortgage work?

The amount you could release with a lifetime mortgage depends on your age and the value of your home. When you take out a plan, the interest accrues, then rolls up and is added to your loan. This is also known as compound interest. Typically, the loan is repaid through the sale of the property when the last remaining applicant either passes away or moves into long term care.

Types of lifetime mortgages

You can take either:

  • A lump sum lifetime mortgage, where interest builds up on the full amount from day one.

  • A drawdown lifetime mortgage, with an initial release followed by smaller amounts as you need them. This could save you thousands in interest if you don’t need all the money straight away. It's worth noting that drawdowns are not guaranteeed and are subject to the prevailing rate at the time, which may be higher than your original interest rate.

Additional features

Your adviser can tailor your plan to make it suitable for your needs based on what’s important to you. This includes:

  • Optional partial repayments to reduce the overall cost of your plan, subject to criteria.

  • Downsizing protection, which allows you to move to a new home and repay the plan in full without any early repayment charges if your new property doesn’t meet the lender’s criteria. This comes into effect after you’ve had the lifetime mortgage for five years.

A member of our experienced team will be able to chat you through your options. More on lump sum vs drawdown lifetime mortgage.

All of our plans meet the Equity Release Council standards, meaning you'll: 

Have the right to move to another property

If you do wish to move, you'll have the right to take your equity release plan with you to a new home, subject to criteria at the time.

Have the right to stay in your home for life

With a lifetime mortgage, you still own your home. This gives you the right to stay in your home for life.

Never owe more than the value of your home

The No Negative Equity Guarantee means you’ll never owe more than your home’s future value, so any debt accrued through equity release can’t be passed on to your loved ones.* 

*However, it’s important to remember that a lifetime mortgage may leave you with limited or no property equity remaining, and it could reduce your financial options in the future.

Back to "What's in this guide?"

Benefits and drawbacks of a lifetime mortgage

We understand it’s important you have all the information you need about equity release to make an informed decision in your own time. But rest assured, if equity release isn’t right for you, we’ll tell you.

Lifetime mortgage benefits

Your specialist lifetime mortgage adviser will explain:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life
  • You’ll always retain full ownership of your home and can stay in it for as long as you wish with a Key lifetime mortgage
  • You can choose to make reduced or no monthly repayments to suit your circumstances
  • You’ll never owe more than your home’s worth with a Key lifetime mortgage
  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges

Lifetime mortgage drawbacks

Your lifetime mortgage adviser will also outline the following important things to think about:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • Equity release may leave you with limited or no property equity remaining
  • Equity release will reduce your financial options in the future
  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply

Who is eligible for a lifetime mortgage in the UK?

If you’re a homeowner aged 55 or over, you could use a lifetime mortgage to release equity from your home to help boost your later life finances.

To take out a lifetime mortgage with Key, you must be a UK homeowner:

  • Aged 55+ (including all joint applicants)
  • With a property worth £70,000+
However, it’s a regulatory requirement that you get advice from a qualified equity release adviser before taking out a lifetime mortgage in the UK.

Our friendly professionals are on hand to answer any questions you might have and to chat through the options available with you.

Back to "What's in this guide?"

How much could I borrow with a lifetime mortgage?

Our latest research shows Key lifetime mortgage customers had access to £79,981 from their properties (Key Market Monitor Q1, 2023.). You'll just need to release a minimum of £10,000.

The amount you could release from your home depends on:
  • The value of your property
  • Your age
As each application is unique and personal to you, use our calculator to get a tailored estimate of how much you could release.

Use our lifetime mortgage calculator

Back to "What's in this guide?"

How much does a lifetime mortgage cost?

The overall cost of your lifetime mortgage borrowing will depend on a few factors.

These include:
  • The amount you want to release in tax-free funds
  • Your interest rate - your interest will be added, rolled up and compounded for the lifetime of the mortgage. See our latest lifetime mortgage interest rates below
  • Whether you take a lump sum, with interest charged on the full amount from day one, or drawdown lifetime mortgage, where you only pay interest on the amount you release
  • Other costs involved with setting up lifetime mortgages including solicitor's and advice fees

Read more in our detailed guide to how much equity release costs.

Back to "What's in this guide?"

What are typical lifetime mortgage interest rates?

Lifetime mortgage interest rates vary depending on the plan you take out and your circumstances. Our lifetime mortgage calculator will give you an illustrative rate based on the details you put in.

With a lifetime mortgage, the interest accrues, then rolls up and is added to the loan, meaning the amount you owe can grow quickly. As a result, equity release will reduce the value of your estate and may leave you with limited or no property equity remaining.

This is also known as compound interest. The interest rate you get will be specific to your circumstances and is fixed for the life of the loan.

Representative example

5.98% AER

Lowest rate with Key

6.96% AER

Rate most Key customers received, or less

7.26% APR

Overall cost for comparison

All rates correct as of 3rd December 2023. This is 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.

Interest rates explained

  • AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest was 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 calculator will give you an illustrative rate based on the details you put in.

Calculate now

Back to "What's in this guide?"

How does compound interest work?

Unless you choose to do so, there are no repayments to make on a lifetime mortgage until the plan comes to an end. As a result, you pay interest not only on the loan itself, but also on the interest that’s already been added to the loan. But there are ways you could reduce the total cost of borrowing of your lifetime mortgage which we outline in this guide. 

Whether interest is added to your lifetime mortgage on a monthly or annual basis is dependent on your plan. But during that first period, the interest is charged and added to the original loan amount - the sum of tax-free cash you unlock from your home’s value. 

  • In the period following, interest is then calculated and charged on what you owe (the original loan amount plus interest), not the amount you initially borrowed
  • This new, larger amount of interest is then added to your loan, and this cycle continues until the plan comes to an end
  • This means a larger amount of interest is added to your lifetime mortgage each period
  • The interest rate at the beginning of your plan determines how quickly the interest grows which will impact the total cost of borrowing over the term of the loan

An example of how compound interest accrues over 15 years

Product Balance at the start of the year MER¹ Interest added² Balance at the end of the year³
Year 1 £81,703 6.74% £5,681 £87,384
Year 2 £87,384 6.74% £6,075 £93,459
Year 3 £93,459 6.74% £6,497 £99,956
Year 15⁴ £209,360 6.74% £14,555 £223,915

This example is for illustrative purposes only and uses the average release amount of £81,703 and MER (monthly equivalent rate) of 6.74% - Key Market Monitor, Q1 2023..
¹ With all Key lifetime mortgages, the interest rate is fixed throughout the life of the plan
² Interest is charged on balance as at the start of the year, not the original amount
³ The balance at the end of the year including compound interest

⁴ This cycle continues throughout the life of the plan

Back to "What's in this guide?"

How could a drawdown lifetime mortgage reduce my cost of borrowing?

As you only pay interest on the funds you release, you could potentially save thousands over the course of your plan with a drawdown lifetime mortgage. Here's an example to help you understand how this could work for you. 

ⓘ Illustrative example

This example is for illustrative purposes only and shows there are two customers who both have access to a lifetime mortgage facility of £81,703 at an interest rate of 6.74% (future drawdowns will be charged at the prevailing interest rate) - Key Market Monitor Q1, 2023.

Customer A

Customer A decides to take all their cash in one go through a lump sum lifetime mortgage, so interest is charged on the full release amount from day one.

(Orange bar)

Customer B

Customer B, meanwhile, takes an initial loan of £51,703 to meet their immediate requirements, so interest is only charged on this lower release amount. Customer B then decides to make two further £15,000 drawdowns over time, taking their total release amount to £81,703.

(Blue bar)

Customer B saves £32,851 in interest charges
While Customer B still borrows the same £81,703 over 15 years, because they take their money in stages, their total cost of borrowing is lower as interest is only charged when they release their funds. As a result, Customer B saves almost £32,851 in interest charges over the total life of their plan. This example is over 15 years but it could be longer or shorter. Axis shows total cost of borrowing.

How does the advice process work?

Releasing equity with a lifetime mortgage is a big decision and the team at Key understand that you’ll need to consider it carefully, so you will receive transparent advice before you apply.

ⓘ Did you know...

You have to get advice from a qualified equity release adviser before applying for a lifetime mortgage - it’s a regulatory requirement.

After you book a free callback for a time that suits you, one of our qualified advisers will get to know you and your needs to recommend the most suitable solution for your circumstances. And if they don’t think equity release is the right option for you, they’ll tell you. It’s part of our company ethos to be open and transparent with all of our customers.

Keep in mind that all our equity release advice only relates to our range of Key lifetime mortgages, a loan secured against your home. You'll only pay our fixed advice fee of £899 on completion of taking out the lifetime mortgage.

How to release equity from your home

Use our free calculator

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

Speak to an adviser

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

Free expert guide

Get a copy of our free, comprehensive guide to lifetime mortgages. You’ll learn how they work, have your questions answered and help you put the life in later life

Your other options

Before deciding on equity release, it's important you're aware of some of your other later life finance options.

Here are some more alternatives that may be more suitable for you:

Equity release costs

Knowing the costs associated with equity release and how to help manage them is important.

Here are some helpful guides to give you a better understanding:

Why choose Key?

Equity release is a big decision and we understand that you’ll need to consider it carefully, by choosing Key we will ensure you receive transparent advice before you apply. Find out more on why you should choose Key.

Highly experienced

We've spent 20+ years helping more than one million over 55s with their later life finances. Our knowledge means that, once we've taken the time to understand your needs, we’ll have a sound idea of what the most suitable plan is for you.

Expert tailored advice

We provide specialist, qualified advice on our equity release products, with a fixed advice fee of £899 only payable on completion.

Trusted and award-winning

All our plans meet the Equity Release Council standards. Plus, we have over 17,000+ Trustpilot reviews giving us a 5-star rating and 80+ industry awards.

Customer stories

We've helped over one million people decide if equity release is right for them. Check out the great things our customers have to say about our professional advice and tailored plans.

John's story

69, Retired

“I sat down with the adviser and he went through every single detail and concerns, plus a lot more which I didn’t know about. They took care of everything… it’s so uncomplicated… the process is so easy.”

Read more on John's experience

Watch more of our customer stories

Back to "What's in this guide?"

What if I already have a lifetime mortgage?

If you already have a lifetime mortgage, over time you may decide you would like to release more funds or switch to a different plan. Your qualified equity release adviser can assess your options and talk them through with you so you know where you stand. They will discuss any early repayment charges that may be payable when switching plans.

Talk about your current Key plan

Call us on 0808 252 9170 to talk about your existing plan

Switch to Key from another provider

Call us on 0808 252 9170 to switch to Key

Lines open 9am-8pm Monday-Thursday, 9am-5:30pm Friday and 9am-5pm Saturday.

Find out if a lifetime mortgage is right for you

Calculate now

Use our lifetime mortgage calculator to see how much you could release

Arrange advice

Book a free appointment with one of our qualified advisers to learn more

Lifetime mortgage FAQs

When it comes to releasing equity from your home, we understand that you may have questions too. To help, we have compiled the answers to the questions we get asked the most. If you are still unable to find the information you're after, we are just a phone call away.

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?” A lifetime mortgage is a type of equity release, allowing you to free up tax-free funds in later life.

The other type of equity release is a home reversion plan, which involves selling all or part of your home to a provider in exchange for a lump sum. We offer lifetime mortgages only, where you keep full ownership of your home.

The tax-free funds you release through lifetime mortgages can be used in a variety of ways including:

  • Clearing an existing mortgage, loan, credit card balance or other debt*

  • Helping loved ones buy their first home, get married or go to university

  • Making home improvements, such as a new kitchen, allowing you to live comfortably for longer

  • Travelling to places you've always wanted to see

  • Generally enjoying a more comfortable retirement

*You should always think carefully before securing a loan against your home to repay existing debt.

Learn more about why our customers release equity.

A key benefit of lifetime mortgages is that you retain full ownership and can continue living there for as long as you like.

A lifetime mortgage is a loan secured against your home. Usuaully, when you or the last surviving partner pass away or move into long-term care, your home will be sold to repay the loan. Any remaining funds from the sale will be passed on to you or your nominated beneficiaries.

We're proud members of the Equity Release Council and provide lifetime mortgages that meet their standards, including the No Negative Equity Guarantee. This is an important protection which ensures you'll never owe more than the value of your home when your plan comes to an end.

This means there's no risk that you'll pass on debt accrued through equity release to your loved ones. In the unlikely event that your home decreases in value enough to leave a shortfall between the sale proceeds and the amount you owe, the no negative equity guarantee writes off the remainder of your loan. However, it’s important to remember that a lifetime mortgage may leave you with limited or no property equity remaining, and it’ll reduce your financial options in the future.

If you currently receive or are eligible to claim means-tested benefits, taking out a lifetime mortgage may affect your eligibility as it will change your financial situation. Our advisers can review your current position and discuss your options moving forward including how a lifetime mortgage may affect any benefits you receive.

You may wish to repay some of your lifetime mortgage early and reduce the size of the loan you accrue interest on. Subject to criteria, we may be able to help you personalise your plan with the option of making ad-hoc repayments of up to 10-12% of the initial amount you've borrowed each year.

Additional repayments, including repaying in full, may incur early repayment charges. Your adviser will explain these terms clearly so you know what your options are.

For various reasons over time, you may decide that you want to move from the property you initially released equity from. You're free to sell your home and move to a new property as long as it meets our lending criteria at the time.

Your lifetime mortgage will be transferred to your new home. Bear in mind you may have to repay some of the funds you initially released if your new property is worth less than your current one. If the new property doesn't meet the lenders criteria then it will need to be repaid and an early repayment charge may be payable.

Applying for a lifetime mortgage is a decision you should think carefully about, and it is a regulatory requirement to get financial advice before doing so. If you're eligible and decide to go ahead, you can expect the process to take between 8-12 weeks from application to completion. This timescale can't be guaranteed, however.

Like the name suggests, a lifetime mortgage is designed to last for life. It usually ends when you or the last remaining applicant passes away or moves into long-term care. The home you released equity from will then be sold, with the proceeds used to repay the lender and any remaining funds going to your estate.

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 whether it's right for you.

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How long does equity release take?

Is equity release safe?

Page last updated: Monday 23 October 2023