What Is Equity Release?

If you’re aged 55 and over and own a property with a value of at least £70,000, you could release tax-free funds as a one off lump sum or a smaller initial release then further installments when needed, through Key. If you’re approaching or in retirement, it could be the boost to your finances you’ve been searching for.

No matter your reasons for looking at equity release, whether it’s for home improvements, to live more comfortably in retirement or to help a family member with a cash gift, simply get in touch and one of our specialist equity release advisers will talk to you about the different options available and find the right one for you. Here we’ll look further into how to release equity from your home.

What does equity release mean?

You may be wondering “what is equity release and how does it work”? Simply put, the equity in your home is the market value of your property minus any outstanding mortgage or other debts you might have secured against it and equity release is a way for homeowners over 55 to release tax-free funds from their home without having to move.

When you look into equity release as an option, as long as you meet our eligibility criteria you could release some of the tax-free money as a one off lump sum or a smaller initial release then further installments when you need them. The money you release from your property will need to pay off any outstanding mortgage and secured debt you have first, then the rest is yours to spend in a variety of ways.

With a lifetime mortgage, the most popular type of equity release, there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually this is when you sell your house, enter into long term care or when you pass away. Our equity release advice relates to Key branded lifetime mortgages only, which is a loan secured against your home.

How to release equity from your home

Before you start the application process for taking some of the equity out of your home, it’s important to remember that you can’t release equity without getting professional advice first. Our equity release advisers will give you advice that is unique to you and your needs, and if equity release isn’t right for you, they'll tell you. We pride ourselves on being completely transparent with all of our customers.

The most popular form of equity release is a lifetime mortgage, and for your peace of mind all of our plans come with several assurances, including the no negative equity guarantee.

Who is eligible for equity release?

To be eligible for equity release, the youngest applicant must be aged 55 or over. You must also own a property within the UK and its minimum value should be £70,000.

At Key, we’ve helped more than 1 million people decide if equity release is right for them or not, giving us a unique understanding of the questions and concerns you might have about equity release.

If you’re thinking about taking some of the equity out of your home, speak to our experienced team today to see if you’re eligible for equity release, or try our free online calculator to find out how much in tax-free funds you could receive.

To help you understand the process, we’ve put together these simple steps to highlight what your journey to equity release could be like:

Speak to an expert – they’ll answer any initial questions you might have and arrange a consultation with one of our qualified expert equity release advisers at a convenient time to you
Talk to your family – we always encourage this so they can ask any questions they might have at the first appointment
First appointment – one of our specialist, equity release advisers will explain the process and find out more about your personal circumstances
Find the right plan – if equity release is right for you our adviser will explore our range of Key branded products
Second appointment – our adviser will present their recommendation to you, talk through the plan and its features, and answer any questions you may have. They'll also provide, discuss and explain your personalised illustration.
Start the paperwork – if you decide to proceed then the application will be submitted and your property will be valued independently
Receive your offer – we’ll send you a formal offer confirming how much cash is available to you, and the full terms and conditions of your plan
The legalities – as soon as everything is agreed, your solicitor can facilitate the signing and witnessing of documents
Receive your funds – although we cannot guarantee how long this will take, you could receive your tax-free money within 8-12 weeks

Read more about your equity release journey here.

How much equity could I release?

As long as you’re eligible, the amount you could release is based on a number of factors. The youngest applicant's age, general health and lifestyle and the value of your property are the main things we look at.

When taking your property into account, we’ll look at the type of construction and the overall condition. We also take into consideration any debts you have secured against it, which will need paying off before your money is released.

In 2022, Key customers had, on average, £87,009 to release. This was to spend in a variety of ways, such as once-in-a-lifetime holidays, home improvements or gifts.

If you’re thinking “how much equity can I release”, why not head over to our free online calculator. This will give an indication of how much in tax-free funds there could be waiting for you in your property.

What two types of lifetime mortgages are there?

A lifetime mortgage is the most popular type of equity release and we offer lump sum lifetime mortgages and drawdown lifetime mortgages. For homeowners over 55, you could release some of the tax-free funds that are tied up in your home. If you’re worried about no longer owning your home, with a lifetime mortgage you still retain full ownership of your property.

Depending on how you want to receive your funds, whether that’s in a one off lump sum or in smaller amounts following an initial release, will determine which lifetime mortgage is right for you.

A drawdown lifetime mortgage offers you more flexibility than a lump sum plan. First, you’ll agree an overall sum of money you can borrow. You can then take an initial lump sum and then withdraw smaller amounts as and when you need it.

When you’re deciding which option is right for you, why not take a look at our comparison between a lump sum and drawdown lifetime mortgage option.

On top of your lifetime mortgage product, you can add extra features for added peace of mind should you need it. For example, with some plans you could add downsizing protection. All of our plans are covered by the no negative equity guarantee. Read more about downsizing protection and other plan features here.

No matter if you’re looking for high loan amounts or flexible features, there's a Key equity release plan for you. We understand that everyone’s personal circumstances and needs are different, which is why your dedicated equity release adviser will personalise your plan to make sure it’s right for you.

Can I move home with equity release?

You can move home if you have released equity from it. Providing we approve the property you wish to move to, as it must meet our lending criteria, you’ll be able to move the lifetime mortgage plan to your new home, subject to criteria − if you want to move to a property that is cheaper than your existing home you may need to repay some of the lifetime mortgage.

Your equity release adviser will be able to talk you through the options available, and help guide you to make sure you reach any goals you may have.

Getting advice for releasing equity

Before you can move forward with equity release, you need to receive qualified equity release advice – it’s a regulatory requirement. Equity release 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.

You can find out if equity release is right for you without it costing you a penny. Talk to one of our expert advisers in a free initial no-obligation consultation. All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £899 is only payable on completion.

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Things to consider

All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
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
£899 advice fee only payable on completion

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:

Page last updated: Thursday 29 June 2023