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
If you're considering equity release, it's important you understand the product in detail. Here's some useful things to think about.
Your specialist equity release adviser will explain:
Your equity release adviser will also outline the following important things to think about:
ⓘ If another product is more suitable, we'll refer you to a different adviser within Key Group who can help. If you go ahead, you'll only be charged the same £1,299 advice fee you'd pay with us, even if their fee is usually higher.
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. 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.
All rates correct as of 11th March 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.
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 idea of how much you could release. Your equity release adviser will be able to give you more information on interest rates.
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.
It's a regulatory requirement for anyone considering equity release to get specialist advice before taking out a plan. So why should you choose Key as your equity release company?
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.
To help you understand the process, we’ve put together these steps to highlight what your journey to equity release could be like: