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Am I eligible?
What is a lifetime mortgage?
A lifetime mortgage is a loan secured against your home, allowing homeowners aged 55 or over to release tax-free funds tied up from their property.
A lump sum lifetime mortgage allows you to receive your tax-free funds all in one go. It’s ideal if you have something specific in mind, such as gifting the money to a family member for a deposit on a new home.
A lump sum lifetime mortgage can help you access the funds you need in full straightaway. Here's some other benefits and potential drawbacks to think about.
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 further funds from your drawdown lifetime mortgage, the money released is subject to the prevailing interest rate at the time. With a lump sum lifetime mortgage, however, your interest rate is fixed for the entirety of your plan.
May be more expensive
As compound interest will be rolled up on the money you’ve released, you may 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.
Firstly, you agree an overall sum of money you can borrow. You then take an initial sum and have the option to release further amounts when needed, subject to a minimum release
Here's some other benefits and potential drawbacks to keep in mind if you're considering a drawdown lifetime mortgage.
Release funds when needed
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A drawdown lifetime mortgage offers more freedom than a lump sum plan, allowing you to release money when you need it.
Save on interest
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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
A few things to keep in mind
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Your lender may have the option to withdraw your additional borrowing facility, though interest will only be applied to the funds you've released
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If you choose to make a drawdown, the funds will be subject to the prevailing, fixed interest rate at the time
As you only pay interest on the funds you release, you could potentially save thousands over the course of your plan with a drawdown lifetime mortgage. Here's an example to help you understand how this could work for you.
ⓘ Illustrative example
This example is for illustrative purposes only and shows there are two customers who both have access to a lifetime mortgage facility of £81,703 at an interest rate of 6.74% (future drawdowns will be charged at the prevailing interest rate) - Key Market Monitor Q1, 2023.
Customer B saves £32,851 in interest charges
While Customer B still borrows the same £81,703 over 15 years, because they take their money in stages, their total cost of borrowing is lower as interest is only charged when they release their funds. As a result, Customer B saves almost £32,851 in interest charges over the total life of their plan. This example is over 15 years but it could be longer or shorter.
If you're thinking about releasing equity from your home, it's important to find out if you could be eligible.
You can check this by using our free online calculator.
To take out a lifetime mortgage with Key, you must be a UK homeowner:
- Aged 55+ (including all joint applicants)
- With a property worth £70,000+
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.
It's a regulatory requirement for anyone considering equity release to get specialist advice before taking out a lifetime mortgage. So why should you choose Key as your equity release company?
We're regulated experts
Key is regulated and a proud member of the Equity Release Council
Trusted award-winners
We've won 80+ awards and 17,000+ excellent Trustpilot reviews, making us the UK's most trusted equity-release specialist
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.
John's story
69, Retired
“I sat down with the adviser and he went through every single detail and concerns, plus a lot more which I didn’t know about. They took care of everything… it’s so uncomplicated… the process is so easy.”
Read more on John's experienceWatch more of our customer stories
Your other options with Key
If another product is more suitable, we'll refer you to a different adviser within Key Group to 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. Key offers alternatives to equity release such as a retirement interest-only mortgage or retirement repayment mortgage.
Other options to think about
It's important to know your other options before going ahead with equity release. These include: downsizing, unsecured lending, using existing assets, or support from friends or family.
When it comes to releasing equity from your home, we understand that you may have questions too. To help, we have compiled the answers to the questions we get asked the most. If you are still unable to find the information you're after, we are just a phone call away.
If you’re looking for ways to release funds from your home, you may be wondering “is equity release the same as a lifetime mortgage?” A lifetime mortgage is one of two types of equity release, allowing you to free up tax-free funds in later life.
The other type of equity release is a home reversion plan, which Key don't offer. This involves selling all or part of your home to a provider in exchange for a lump sum. We offer lifetime mortgages only, allowing you to keep full ownership of your home.A key benefit of lifetime mortgages is that you retain full ownership and can continue living there for as long as you like.
A lifetime mortgage is a loan secured against your home. Usually, when you or the last remainng applicant pass away or move into long-term care, your home will be sold to repay the loan. Any remaining funds from the sale will be passed on to you or your estate.We're proud members of the Equity Release Council and provide lifetime mortgages that meet their standards, including the No Negative Equity Guarantee. This is an important protection which ensures you'll never owe more than the value of your home when your plan comes to an end.
This means there's no risk that you'll pass on debt accrued through equity release to your loved ones. In the unlikely event that your home decreases in value enough to leave a shortfall between the sale proceeds and the amount you owe, the no negative equity guarantee writes off the remainder of your loan.If you currently receive or are eligible to claim means-tested benefits, taking out a lifetime mortgage may affect your eligibility as it will change your financial situation. Our advisers can review your current position and discuss your options moving forward including how a lifetime mortgage may affect any benefits you receive.
You may wish to repay some of your lifetime mortgage early and reduce the size of the loan you accrue interest on. Subject to criteria, we may be able to help you personalise your plan with the option of making ad-hoc repayments of up to 10%-12% of the initial amount you've borrowed each year.
Additional repayments, including repaying in full, may incur early repayment charges. Your adviser will explain these terms clearly so you know what your options are.Things to consider
- All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
- 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
Equity release isn't something you should rush into. Read our RetireWise articles to learn more about how it works and whether it's right for you.
Page last updated: Thursday 12 September 2024