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Am I eligible?
What are the different types of equity release plans?
Equity release is available to UK homeowners aged 55 or over. There are four different ways to unlock some of your home's value, tax-free, through equity release.
Watch our video to learn more about the benefits and drawbacks of equity release and see if it could be right for you.
Our equity release advice relates to Key's range of lifetime mortgages only - loans secured against your home.
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Transcript
What are the benefits and drawbacks of equity release?
Like any financial product, equity release has potential benefits and drawbacks to weigh up.
Benefits
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Tax-free cash: You can unlock cash from your home, tax-free, to help meer your needs in later life
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Stay in your home: You'll retain full ownership of your home and can stay in it for as long as you wish
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Reduced or no monthly repayments: You can make reduced or no monthly repayments with a lifetime mortgage. This applies to a payment-term lifetime mortgage after the oldest applicant turns 66, and overpayments can be made at any time, subject to criteria
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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, provided terms and conditions are met
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A payment-term lifetime mortgage: Could allow you to unlock more of your home's value at a lower interest rate than a comparable lifetime mortgage
Drawbacks
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The interest can build up quickly: Lifetime mortgages and payment-term lifetime mortgages are loans secured against your home and are subject to compound interest, meaning the amount you owe can grow quickly
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Reduced value of estate: Equity release will reduce the value of your estate and 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 remaining and will reduce your financial options in the future
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Mandatory payments: There's a period of mandatory payments with a payment-term lifetime mortgage, and your home may be repossessed if you don't keep up with these payments
We only recommend equity release if it's right for you
You have to receive qualified advice before taking out equity release, so you can be sure it's the right decision for you
All our equity release advice relates to Key lifetime mortgages and payment-term lifetime mortgages only - loans secured against your home.
Our fixed advice fee of £1,299 is only payable on completion. Equity release will reduce your estate's value and may affect your entitlement to means-tested benefits.
A lifetime mortgage or payment-term lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future.
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
Lifetime mortgage interest rates vary depending on your plan and circumstances. They're fixed for the life of the equity release plan.
Representative example
All rates correct as of 29th September 2024. 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.
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AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest compounded each year.
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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
We understand that everyone's needs are different. That's why we can personalise your lifetime mortgage to make sure it's right for you.
Key is a specialist, award-winning later life mortgage provider for the over 55s. We've helped over a million customers see if equity release was right for them. After we take the time to understand your needs, we'll recommend the most suitable later life option for you.
Customer stories
ⓘ Did you know...
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.
Things to consider
- Equity release will reduce your estate’s value and may affect your entitlement to means-tested benefits
- A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future
- The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
- Our fixed advice fee of £1,299 is only payable on completion
Page last updated: Wednesday 11 September 2024