Equity release glossary

A

Accreditations
Key Equity Release is authorised and regulated. We're a proud member of the Equity Release Council. These accreditations mean we must follow strict industry standards. This includes lifelong safeguards such as the Equity Release Council's no negative equity guarantee. 

Accrues (interest)
This is when interest adds to the balance you owe over time. 

Advice appointment
A consultation with a qualified Key Equity Release adviser. This is to discuss your goals, eligibility, and plan options. We review all equity release alternatives too. This takes place over telephone or by video call. We can also visit you at home if needed. There's no cost for advice unless you go ahead with a plan. More on appointments.

Advice fee
The fee you pay for equity release advice. You only pay this on completion of a plan. More on equity release costs.

Affordability
An assessment of whether you can afford monthly repayments. Affordability checks are required for some products, including RIO's or residential mortgages.

Age eligibility
The youngest age for equity release products. It's 55 for lifetime mortgage and 65 for home reversion.

AER (Annual Equivalent Rate)
Shows what the interest rate would be if the interest compounded each year.

Agreement in Principle (AIP)
An initial idea from a provider of how much you could release. It's subject to full eligibility checks and valuation.

APR (Annual Percentage Rate)
Shows the yearly cost of borrowing, including fees, expressed as a percentage. 

Arrangement fee
A fee paid to set up your plan which covers the lender's administration costs.

Attorney (LPA)
A person appointed under a Lasting Power of Attorney to make decisions for you.

Authorised and regulated
A company or adviser supervised by the financial services regulator. This is to provide financial advice or products in the UK. Key is authorised and regulated so we must meet strict standards of conduct.

Awards
Recognition Key has received from independent industry bodies. This is for excellence in equity release advice, customer service, and innovation. These awards highlight Key's commitment to honesty, expertise, and care. The values that underpin every conversation with our customers.


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B

Bank of England Base Rate
The UK interest rate set by the Bank of England. It influences borrowing costs across markets. This impacts gilt rates.

Beneficiary
A person or organisation that may inherit from your estate when you die.

Buildings insurance
Insurance that protects the structure of your property. You must maintain suitable buildings insurance while an equity release plan is in place.


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C

Capital (savings)
Capital includes savings and other assets, including cash released from your home. Capital can affect means-tested benefits. Any money held as cash may be treated as capital when means-tested benefits are assessed.

Cash facility (drawdown reserve)
An agreed pot of funds you can access in stages after taking a lump sum under a drawdown lifetime mortgage. Compound interest only accrues on the funds you release.

Completion
When legal work finishes, funds get released and your plan starts. See what to expect.

Completion statement
A summary document showing the loan amount, fees, and other key financial details when a plan completes.

Compound interest (roll-up)
With a lifetime mortgage, interest is charged on both the original loan and the interest added over time, meaning the amount you owe can grow quickly. The loan and rolled-up interest are typically repaid when the property is sold, typically after death or moving into long-term care.

Consolidating debts
Repaying existing debts. While equity release can be used to repay debts, it may not be suitable in all cases and other options may be more appropriate. Your adviser will consider whether this is right for your circumstances.

Conveyancer (solicitor)
Independent legal professional who advises you and handles the legal work. Your solicitor cannot provide any financial advice; however, they will advise on how your chosen product will affect you, explaining the costs and benefits of your plan and the implications of the legal documents you will need to sign.

Consumer Duty
A regulation that requires financial firms to deliver good outcomes for retail customers. It means that at Key, we must always act in your best interests. Customer understanding is crucial. To do this, we provide clear information, fair value, and products that meet your needs. Consumer Duty applies to every stage of our equity release journey.

Credit check
Lenders may check your credit history before they approve your application. Impaired credit isn't an automatic decline for a lifetime mortgage, but criteria varies.

Customer promise
Key's pledge to provide honest advice, clear information, and lifelong support. Our promise: If equity release isn't right for you, we'll tell you. 

Customer reviews
Independent feedback from people who've used Key's service. Every customer review helps us improve and gives future customers confidence in us. Key's reviews get collected and verified through trusted third-party platforms like Trustpilot. Check our customer reviews out. 

Customer understanding
A Consumer Duty principle. It means firms must communicate in a way that customers can understand. At Key, we use plain English and transparent explanations. This lets you make informed, confident decisions about equity release. 


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D

Daily interest
Interest that's calculated and added to your loan balance each day. More on compound interest.

Default (missed payments)
A default occurs when the terms of a credit agreement are broken, typically through missed payments. This applies only to equity release plans that require regular monthly repayments, as most lifetime mortgages do not require monthly payments.

Deferred interest
Interest that builds up when you take a payment holiday on your lifetime mortgage. This only applies to some lifetime mortgage plans which require regular monthly payments.

Downsizing
The process of selling your home to move to a smaller property.

Downsizing protection
Downsizing protection applies after a qualifying period of taking out your lifetime mortgage. It means you can move home and pay off the loan in full without incurring early repayment charges if your new property does not meet lender’s criteria at that time. This means you can repay your loan in full without an early repayment charge.

Drawdown facility
A drawdown lifetime mortgage feature. It lets you keep funds in reserve so you can access them later. You only pay compound interest on the funds released. Keep in mind that a future drawdown facility isn't guaranteed. It's also subject to the prevailing interest rate when you withdraw funds. 

Drawdown lifetime mortgage
A drawdown lifetime mortgage lets you access funds from an agreed facility in the future. This is after an initial lump sum when the plan starts.


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E

A fee if you repay all or part of a loan earlier than agreed. Many plans include an overpayment limit for partial repayments and downsizing protection.

Eligibility (property and personal)
Based on age, property value/type, lease length and construction. For some plans, health and lifestyle will also form part of the checks. More on equity release eligibility.

Enhanced lifetime mortgage
Offers larger release or an improved fixed interest rate. You must meet certain health/lifestyle criteria to qualify.

Equity
Your home's value minus any existing mortgage or secured loan balance. A home equity calculator can help you work this out.

Equity release (overview)
Equity release lets UK homeowners aged 55+ access some of the money tied in the value of their home. Options include lifetime mortgage and home reversion. 

Equity release advice
Equity release is a regulated financial product. You must receive personalised advice from a qualified, regulated adviser before you release funds. Your adviser will explain all your options, assess your needs and circumstances. Only then will they recommend the right solution for you. All our equity release advice relates to lifetime mortgages. You get free initial advice with Key as you only pay our fixed advice fee on completion of a plan.

Equity release alternatives
Other options such as downsizing, RIO, or using savings. We'll always review all your options - not only equity release - to find the right option for you.

Equity release calculator
An easy online tool that shows how much tax-free cash you could unlock from your home. It's based on your age and property value. Our equity release calculator gives an instant estimate with no credit score impact. It helps you understand your potential options before you speak to an adviser.

Equity release callback
A simple online form where you can request a call from a Key specialist to discuss your options. It's free and no obligation. It's an opportunity to ask questions and get personalised guidance.

Equity Release Council

. All lifetime mortgages we recommend meet its standards.



Equity release guide
A free,

F

Fact find
The information your equity release adviser gathers to understand your goals and circumstances. They can then recommend the right option for you. More on fact find.

Fair value
A Consumer Duty principle. All regulated financial services firms must ensure their products and services represent fair value. This means the price you pay must be reasonable in relation to the benefits and quality of service. There must be no hidden costs or unfair terms. 

Fixed interest rate
Equity Release Council safeguard. The interest rate which you receive on your lifetime mortgage must be a fixed rate. If it's a variable (capped) rate, it must have a cap for the life of the loan. More on equity release safeguards. 

Freehold
Outright ownership of the property and the land on which it's built.

Free estimate
An initial idea of how much tax-free cash you could release from your home's value. 

Free initial advice
At Key, your initial advice is free. You only pay our fixed advice fee of £1,699 on completion of a plan. This means you can explore your options and find out if equity release is right for you without it costing a penny.

Further advance
Lets you borrow more on your existing lifetime mortgage later. It requires advice and is subject to valuation and lender criteria. Your new funds may be at a different fixed interest rate to your original lifetime mortgage.


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G

Gifting
Giving equity release funds to family members (cross-generation gifting). For example, towards a deposit or education. Check how gifting could affect means-tested benefits or tax before you go ahead. Key do not provide tax advice.

Gilt-linked ERC
Some older plans linked early repayment charges (ERC) to government gilt rate yields. Modern plans usually have fixed early repayment charges - check your KFI for confirmation. 

Gilt rate
The interest rate (yield) on UK government bonds, known as gilts. These rates help set the wider cost of borrowing in the UK. They influence the interest rates and early repayment charges (ERCs) on lifetime mortgages. When gilt rates fall or rise, it can affect how much you may owe if you repay early. More on gilt rates.

Good outcomes
A Consumer Duty principle to ensure customers achieve good outcomes. This means products perform as expected and advice is suitable. Communication must be clear and fair throughout your equity release journey.

Ground rent (service charges)
Costs paid by leaseholders. Lenders check affordability or if lease terms meet criteria.


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H

Health and lifestyle questionnaire
Used to assess eligibility for an enhanced lifetime mortgage.

Home equity calculator
A home equity calculator estimates the total value of equity (the part of your home you own outright).

Home reversion plan
A home reversion plan is a type of equity release. You sell all or part of your home to a home reversion provider for less than it's worth. You get to live in it still (usually rent-free) for life. The provider gets its share when the property's sold.

Home reversion provider
The company that buys all or part of your property in a home reversion plan.


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I

Illustration
Also called a Key Facts Illustration (KFI). It's a personalised document showing how your equity release plan would work. It includes the loan amount, fixed interest rate, costs, and features. It lets you compare your options before deciding. 

Illustration expiry
The date when your Key Facts Illustration ends.

Impaired (adverse) credit
Also known as bad credit which makes a person a higher risk for lenders. This may result in higher interest rates or rejection after a credit check. You may still qualify for a lifetime mortgage as criteria varies by provider.

Independent legal advice
Advice from a solicitor, not the lender. You must receive independent legal advice before releasing equity. See legal adviser panel for more info.

Inheritance protection
A feature that lets you ring-fence a percentage of your property's future value. This is then a guaranteed inheritance when it's sold. More on equity release safeguards. 

Interest (compound)
With roll-up products, the unpaid interest is added to the loan. Compound interest is therefore charged on the growing balance, which means the amount owed can increase quickly over time.


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J

A plan taken by two people. This usually ends when the last borrower dies or enters long-term care.


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K

Standardised document which explains product features, costs, risks and scenarios. It's provided at the recommendation stage and has an illustration expiry. It's only valid for a certain amount of time.

Knowledge check (family discussion)
We encourage all customers to discuss equity release with family to make sure it's right for you. We'll always review all options - not only equity release. Our customer promise: if it isn't right for you, we'll tell you. 


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L

Lasting Power of Attorney (LPA)
A legal document that lets you appoint attorneys to make decisions for you. There are two types: Health and Welfare, and Property and Financial Affairs.  More on LPAs.

Later life mortgage
A range of mortgage options for people in or approaching retirement age. More on later life mortgages.

Later life mortgage finder
A later life mortgage finder is a quick online tool. It matches you to potential later life mortgage solutions. It's based on your age, property, and goals. It helps you explore your options before getting advice.

Leasehold
You own the property for a set term and pay ground rent or service charges the individual who owns the land (freeholder) for a set period of time.

Legal advice
Guidance from a qualified solicitor. They explain your rights and the legal effects of your equity release plan. You must receive independent legal advice before you complete your lifetime mortgage.

Legal adviser panel
A panel of solicitors which you can choose from, to provide you with independent legal advice.

Legal fees
Solicitor fees for the legal work connected to equity release.

Lifetime mortgage
A type of equity release which is a loan secured against your home. It lets homeowners aged 55+ release tax-free some of the funds tied up in their home's value.

Lifetime mortgage calculator
A lifetime mortgage calculator is an online tool. It gives an estimate of how much you could release tax-free with a lifetime mortgage. It's based on your age and property value. 

Lifetime mortgage provider
The lender offering the plan that lets you release tax-free cash from your home.

Loan-to-value (LTV)
Loan as a percentage of the property value. This helps to calculate your maximum release amount.

Lump sum lifetime mortgage
A lifetime mortgage where you receive a single lump sum instead of drawing funds over time. As the funds are released in one go, the interest is charged on the full amount from the day the money is released. Compound interest builds up from day one.


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M

Maximum release amount
The most you can borrow with a lifetime mortgage based on your age and property value.

Means-tested benefit
Payments available to people where income and/or capital is below government-specified limits. Equity release may affect your entitlement to means-tested benefits, such as pension credit.

Minimum property value
The lowest property value accepted to qualify for a lifetime mortgage. To qualify for a lifetime mortgage with Key, your home must be worth £70,000+. 

Minimum release amount
The lowest amount you can borrow with a lifetime mortgage we recommend is £10,000. 

Mythbuster
Our articles aimed at dispelling common equity release myths.


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N

No early repayment charge feature
This lets you repay in full without an early repayment charge. Subject to circumstances.

Negative equity
When debt secured against your property exceeds your home's value. 

No negative equity guarantee
A guarantee with all plans that meet the Equity Release Council standards. It means you or your estate will never owe more than your home's worth. With a lifetime mortgage, the loan is typically repaid through the sale of the property. You or your family will not be liable for any shortfall. No debt from equity release can pass to your beneficiaries. More on equity release safeguards.


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O

Occupation (tenants/waiver)
Occupants not on the plan may need to sign a waiver to confirm they are aware of the lifetime mortgage being placed and protects the lenders rights.

Offer (mortgage)
The formal document from the provider which confirms terms after valuation and underwriting.

Online eligibility checker
A quick online tool that helps you see if your home could qualify for equity release. More on online eligibility checker.

Optional monthly payments
A flexible feature of a lifetime mortgage. It lets you choose between regular voluntary payments or no monthly payments. Making payments helps manage how your loan grows over time, so it's recommended to make them if you can. You can stop or restart payments at any time within your plan's limits. 

Overpayments (voluntary partial repayments)
Many plans allow early repayment charge-free partial repayments. This is within an annual overpayment limit to reduce interest build-up. This helps you manage the total cost of borrowing.

Overpayment limit
The most you can repay each year without paying an early repayment charge. This is usually around 10-12% of the original loan.


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P

Equity Release Council standard. It lets you make payments to reduce what you owe without incurring an early repayment charge. This will be in line with your plan's overpayment limit.

Pension Credit
A means-tested benefit for low-income pensioners that equity release may affect. More on Pension Credit.

Personalised illustration (Key Facts Illustration)
A document that sets out your recommended plan's details. It includes how much you can release, the rate, fees, and what happens in different scenarios. It's personal to you and forms part of your regulated equity release advice.

Plain English
At Key, we make financial advice and guidance clear and easy to follow. Plain English means using straightforward language for good customer understanding. We explain complex terms in a simple way and avoid unnecessary jargon. This helps you make confident decisions about equity release without confusion. 

Porting (right to move)
Porting, or right to move, is when you transfer your existing lifetime mortgage to a new home. Most modern equity release plans are portable. This lets you move without repaying your loan if the new property meets lenders criteria. If it doesn't, you can repay the mortgage in full. This can sometimes be without an early repayment charge.

Probate
Legal process of handling someone's estate after death.

Property eligibility
Lenders check your home's value, type, construction and lease. This is to confirm it qualifies for equity release. Minimum values and exclusions may apply.

Provider
The lender which provides the equity release plan. Your qualified equity release adviser helps find the right plan for you.


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Q

Qualified equity release adviser
Key Equity Release's qualified advisers who specialise in equity release.


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R

Release amount
The amount of tax-free funds you are able to release from your property. An equity release calculator can give you an estimate using your age and property value.

Retirement interest-only mortgage (RIO)
Interest-only mortgage. The capital is repaid on death, sale, or moving into long-term care. More on RIOs.

Retirement finances
The money you use to support your lifestyle after you stop work. This includes pensions, savings, and property wealth.

Retirement planning
Preparing your finances, housing and lifestyle to make the most of life after work. Read our retirement planning articles. For independent guidance, check Money Helper out. 

RetireWise
Key's knowledge hub which offers guides, articles, and tools. It's designed to help you make confident, informed decisions about your retirement finances. Visit RetireWise.

RetireWise Life
Part of Key's RetireWise hub focused on lifestyle, wellbeing, and relationships in retirement. It offers supportive, practical content on topics. This includes staying active and caring for loved ones. It also has tips on planning your next chapter with confidence. Read RetireWise Life.

RetireWise Money
Part of RetireWise that helps you feel more confident managing your retirement finances. It covers everything from budgeting to understanding pension income. There's plenty to read on equity release too - all explained in plain English. Read RetireWise Money.

Right to move home
Equity Release Council standard which lets you move to a different property. Your lender must let you transfer your plan if the new home meets their lending criteria. More on equity release safeguards.

Right to make partial repayments
Equity Release Council standard. This partial repayment feature lets you make payments without early repayment charges. Subject to lending criteria. More on equity release safeguards.

Right to stay in your home
Equity Release Council standard. It lets you stay in your home for life, or until you move into long-term care, if you follow your plan's terms. More on equity release safeguards.

Roll-up interest
Instead of making fixed monthly payments, the interest adds to your loan balance over time. This means you pay interest on the amount borrowed and on the interest already added. This is compound interest. The total is usually repaid when the last remaining customer passes away or moves into long term care and the home is sold.

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S

Secured loan
A loan secured by the lender against an asset you own, usually your home. A lifetime mortgage is a loan secured against your home.

Solicitor
A legal professional qualified to give legal advice and support.

Suitability report
A personalised document explaining why a recommended plan is right for you.

Switch provider
Similar to a residential mortgage, you may switch your existing equity release plan. You can switch to another provider if it's in your best interest. Your adviser will look at any early repayment charges you may need to consider.


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T

Tax-free cash
The money released from equity release is tax-free. It may affect your means-tested benefits entitlement or tax position. 

Telephone advice
A convenient way to speak with one of Key's qualified equity release advisers over the phone. Telephone advice lets you discuss your options and ask questions. You can book an appointment for regulated advice from the comfort of your home - all with no obligation to go ahead.

Telephone support
Key's UK-based team is here to answer your questions over the phone. Whether you're new to equity release or already have a plan in place, our friendly team can help. They can explain terms, book appointments, and connect you with a qualified adviser. All with no pressure or obligation. 

Tenants in common
Joint ownership where each person has a specific share which they can leave to who they want in a will.

Tenure protection
Equity Release Council standard. It gives you a lifelong right to stay in your home with a lifetime mortgage. More on equity release safeguards.

Trustpilot
A public consumer review website. Customers can review their experiences with Key Equity Release and other businesses.


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U

Underwriting
Lender's assessment of your eligibility, property, and application.

Universal Credit
A means-tested benefit which equity release may affect.


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V

Valuation
The surveyor's estimate of what your home's worth. This valuation report helps set how much you can release. To get an idea of what your home's worth, try free tools like Zoopla or Rightmove.

Valuation fee
Fee for your property valuation when you release equity.

Valuation report
A valuation of your home carried out for equity release purposes. This informs your loan-to-value (LTV). Check the valuation report fees.

Video call advice
An online appointment where you meet with a qualified equity release adviser. It's via secure video link. You get the same authorised and regulated advice as telephone advice. Plus, the personalised service is with the added convenience of connecting from anywhere. It also lets you bring friends or family along so you all get the full picture together. 

Vulnerable customer
Someone especially susceptible to harm. Firms must provide extra support.


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W

Waiver of ERC (long-term care)
An Equity Release Council feature on lifetime mortgages where early repayments charges may not apply if the borrower moves into care.

Will
A legal document setting out who inherits your assets. More on wills.


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X

X-generation gifting (cross)
When you use equity release funds for gifting to family. This could be money to children for a home deposit, education, or support later in life.


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Y

Yield (investment)
The return on investment. It's often mentioned when comparing lifetime mortgage rates with annuity or savings yields. 

Yield curve (Gilts)
The relationship between government bond yields and maturity length. This affects gilt-linked early repayment charge calculations. See gilt rate.

Youngest applicant age
Lenders base eligibility and loan-to-value (LTV) on the youngest applicant on the deeds. This includes for a joint plan.


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Z

Zero-cost advice
You get free initial advice with Key. You only pay our fixed equity release advice fee if you complete a plan.


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