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Is equity release safe?

Your Money
Monday 19 December 2022
Looking to unlock some of the equity tied up in your home? If you're 55 or over, it could prove to be a way to boost your financial situation in later life. Pay back existing debts , support family members, or making the most of retirement – you can use the funds in a variety of ways. But it is a big decision to make. And to make it, you will want to know whether equity release is safe.

It's understandable to have concerns if it's something you may be considering. But we're here to ensure you get all the details you need to make an informed decision. This includes explaining how safe equity release is – as well as some of the potential pitfalls you'll need to be aware of. And if you then want to explore your options, you can book an appointment with us.

You should always think carefully before securing a loan against your property.

What does it mean to 'release equity' from a home?

If you're a homeowner, you might have a lot of equity tied up in the value of your property. One obvious way to access that money is to sell up. But that's not really an option if you don't want to move. So, a more suitable option could be to release some of the equity you have – i.e., the value of your home minus any remaining mortgage or loan secured against your home.

By choosing a lifetime mortgage with Key, you could unlock tax-free funds as either one single lump sum or in smaller instalments after an initial lump sum amount.

Added protection

Any equity release plan is regulated by the Financial Conduct Authority (FCA). So, no-one can legally offer you a plan if they haven't first been authorised by the FCA.

The FCA also imposes strict rules that equity release providers must adhere to.

In addition to the FCA, 90% of lenders are members of the Equity Release Council (ERC). With an ERC member, you can be sure their products meet a set of standards to protect consumers – such as offering a 'no negative equity' guarantee and the ability to stay in your home for life.

Is Key Equity Release safe?

Yes. All our plans come with safeguards as standard:
  • The 'no negative equity' guarantee means you'll never find yourself in a position where you owe more than the value of your home.
  • Our lifetime mortgages mean you'll still own your home.
  • Subject to criteria, you could move home and take your lifetime mortgage plan with you.

On top of that, we've helped more than one million people on their equity release journey. We're also proud that more than 16,000 people have rated us as 'Excellent' on Trustpilot . This means you can rest assured that you're in safe hands when you choose Key to unlock some of the equity in your home.

What are the main risks of equity release?

Like a lot of other financial solutions, there are potential pitfalls to be aware of. Equity release is suitable for some homeowners, but not others. Having all that information at your fingertips is vital when reaching a decision that works for you.
  • With a lifetime mortgage , a loan secured against your home, typically interest will accrue and roll up – before being added to the loan amount. This is called compound interest and can significantly inflate how much needs to be paid back at the end of the plan.
  • An equity release plan will reduce the total inheritance you can leave to loved ones. It doesn't, however, mean that you can't leave any inheritance.
  • An inheritance protection guarantee allows you to protect a percentage of your home’s future value which can be given to loved ones after you pass away. The proportion that you’ve chosen to protect can then pass to your beneficiaries when the plan comes to an end and the house is finally sold, regardless of how much is outstanding on the loan.
  • If you receive means-tested state benefits, the amount of tax-free money you release from your home could affect your eligibility or entitlement.

What should I consider when looking into equity release?

It's worth considering all your options before applying for an equity release plan. By doing so, it helps ensure that you're doing something that is the most suitable option for you.

Looking at all the options is a useful way to learn which is the most appropriate for the amount you want to borrow. If you decide that equity release is what you want to do, then take time to think about the different options – e.g., lifetime mortgages.

When talking to an adviser, there are things to consider. Have they provided a full breakdown of the costs involved? Can they guide you through the alternatives? Are they even the right adviser to take you through the process?

What are the next steps?

At Key, our advisers are committed to ensuring you get the insightful advice you need. Our goal – as an ERC member – is to help you reach the most appropriate decision; one tailored to your unique circumstances. So, if you think we can help you, why not book an appointment for an initial, no-obligation consultation with one of our equity release experts?

Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.

Key Equity Release offers lifetime mortgages only, which is a loan secured against your home. Lifetime mortgages are the most popular form of equity release. With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end.

Our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £1,299 is only payable on completion of a plan.
Page last updated: Tuesday 16 April 2024