We use essential cookies to enable our website to function and non-essential cookies for marketing purposes. You can change your cookie settings here, otherwise we’ll assume you’re OK with the current settings.
There are two types of equity release: lifetime mortgages, and home reversions. Find out more about the different types of equity release and how equity release works. It's worth noting that equity release is a complex product with long lasting effects and may not be right for everybody.
Equity can be released in one of two ways via a lifetime mortgage. If you want the money all at once, then you could opt for a lump sum lifetime mortgage. If you want to take out an initial amount then release further funds as and when you need to, you might choose a drawdown lifetime mortgage.
✓ Lower interest rates
Lump sum lifetime mortgages sometimes come with a lower rate of interest compared to a drawdown lifetime mortgage, which can help reduce your total cost of borrowing.
✓ Interest rates don’t change
When you release the funds as a single lump sum, the money released is subject to the fixed interest rate at the time.
ⓘ May be more expensive
As compound interest will be rolled up on the money you’ve released, you will end up owing more if you take all your available cash in one go.
ⓘ Limited ability to release further funds
With a lump sum lifetime mortgage, you can’t release further funds unless you apply for a further advance. This is subject to the lender’s criteria, your age and your property’s value at the time of application. This also requires advice and is subject to fees.
✓ Release funds when needed
A drawdown lifetime mortgage offers more freedom than a lump sum plan, allowing you to release money when you need it.
✓ Save on interest
A drawdown lifetime mortgage also allows you to potentially save a considerable amount in interest over the lifetime of your plan, as the interest only accrues on the money you’ve released
ⓘ Your drawdown facility isn't guaranteed
Your lender may have the option to withdraw your drawdown facility.
ⓘ You don't know what interest rates will be like in the future
If you choose to make a drawdown, the funds will be subject to the prevailing, fixed interest rate at the time
Your specialist equity release adviser will explain:
Your equity release adviser will also outline the following important things to think about:
With a lifetime mortgage, the interest accrues, then rolls up and is added to the loan. 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.
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.
Over the years, more than a million customers have benefitted from our expert advice, experience and professionalism from Key. We've been rated 'Excellent' on Trustpilot and you can check out the great things our customers have to say about our equity release plans.