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Equity release explained
Equity release is a complex product with a lifetime commitment so may not be right for everybody.
Watch our video to find out more about equity release and how it works.
You can also read our guide below for more information to help make a decision that's right for you.
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Transcript
When it comes to equity release, we all have questions.
What, for instance, is it exactly?
Equity release is a way for homeowners over 55, whose property is worth at least £70,000, to release tax-free cash from their homes.
And will we still own our home?
Yes – and with Key’s plans you can stay in it for as long as you like.
Will we have to make monthly repayments?
No, not unless you want to. The loan, plus rolled-up interest, will be paid back when your plan comes to an end.
Could our family inherit the debt?
No – all of Key's plans come with a ‘no negative equity’ guarantee, so you’ll never owe more than your home is worth and there’ll never be a debt for your family to take on.
How much can we release?
This depends on your age, how much your house is worth and your general health. Find out how much you could release with our free calculator.
What do people usually use the money for?
Key customers spend the tax-free cash on many different things, such as repaying existing debts, travel, and home improvements.
So, what’s different about Key?
Because Key takes a personal and honest approach to equity release, it's good to know we can answer all your questions in a way that's right for you. By ordering our free expert guide, using our free online calculator, or by calling us.
Key - for the life in later life.
What, for instance, is it exactly?
Equity release is a way for homeowners over 55, whose property is worth at least £70,000, to release tax-free cash from their homes.
And will we still own our home?
Yes – and with Key’s plans you can stay in it for as long as you like.
Will we have to make monthly repayments?
No, not unless you want to. The loan, plus rolled-up interest, will be paid back when your plan comes to an end.
Could our family inherit the debt?
No – all of Key's plans come with a ‘no negative equity’ guarantee, so you’ll never owe more than your home is worth and there’ll never be a debt for your family to take on.
How much can we release?
This depends on your age, how much your house is worth and your general health. Find out how much you could release with our free calculator.
What do people usually use the money for?
Key customers spend the tax-free cash on many different things, such as repaying existing debts, travel, and home improvements.
So, what’s different about Key?
Because Key takes a personal and honest approach to equity release, it's good to know we can answer all your questions in a way that's right for you. By ordering our free expert guide, using our free online calculator, or by calling us.
Key - for the life in later life.
Equity release is a way for homeowners aged 55 and over that own a property with a value of at least £70,000 to release tax-free funds from their home. If you’re approaching or in retirement, it could be the boost to your finances you’ve been searching for.
There are four types of equity release. All our equity release advice relates to Key lifetime mortgages and payment-term lifetime mortgages only - loans secured against your home. Other options that Key doesn't offer are interest-payment lifetime mortgages and home reversion plans. Find out more below about the different types of equity release and how equity release works.
Unless you choose to do so, there are no repayments to make on a lifetime mortgage until the plan comes to an end. As a result, you pay interest not only on the loan itself, but also on the interest that’s already been added to the loan, meaning the amount you owe can grow quickly.
With a lifetime mortgage, 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. Find out more about compound interest.
The initial costs you pay to release equity depend on your provider, adviser and your product. When you’re working out the cost of equity release, there are four fees that you may need to budget for:
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Surveyor's valuation: If applicable, this is usually paid with your application
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Solicitor's fees: This is typically paid when you receive your tax-free funds on completion
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Lender's application fee: If applicable, this is usually paid whe you receive your tax-free funds
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Our advice fee: Our fixed advice fee of £1,299 is only payable on completion
Lump sum vs drawdown lifetime mortgage
You have two options when it comes to releasing your funds with a lifetime mortgage:
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With a lump sum lifetime mortgage you could release tax-free funds from your home as a single amount.
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A drawdown lifetime mortgage lets you release your tax-free money in smaller amounts. This is after an initial lump sum.
With a drawdown lifetime mortgage, you only take out the money you need when you need it following an initial lump sum. This can help reduce your total cost of borrowing, as interest is only charged on the money you release, rather than the full amount available.
Drawdowns are subject to the prevailing, fixed interest rate at the time, which may be higher or lower than the original interest rate. A drawdown facility is not guaranteed as the lender has the right to withdraw it. More on lump sum vs drawdown lifetime mortgage
It's important you have all the facts available to make the right decision for you.
Benefits
Your specialist equity release adviser will explain:
Drawbacks
Your equity release adviser will also outline the following:
If you're thinking about releasing equity from your home, it's important to find out if you're eligible. You can check this by using our free online calculator.
To take out an equity release plan with Key, you must be a UK homeowner:
- Aged 55+ (including all joint applicants)
- With a property worth £70,000+
ⓘ Did you know...
If you're not eligible now, why not try our later life mortgage finder? It may be that we can still help you take control of your finances in later life.
To help you understand the process, we’ve put together these simple steps to highlight what your journey to equity release could be like:
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Speak to a specialist: One of our specialists will answer your initial questions. If you'd like to find out more, they'll arrange a consultation with an expert equity release adviser.
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Talk to your family: Equity release is a big decision, so we encourage you to take your time researching and discussing it with your family. You can invite them to appointments too.
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First advice appointment: A dedicated equity release adviser will find out more about your circumstances and requirements and discuss the options available including other later life lending options, letting you know whether equity release could be suitable for you.
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Finding the right plan: If you decide to continue with the process, your adviser will search our range of lifetime mortgages to find the most suitable option for you.
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Second advice appointment: Your adviser will present their expert recommendation and a personalised illustration of how it could work financially, and answer any questions you may have.
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Application: Should you decide to go ahead, your adviser will complete an application form with personal details and paperwork such as identification and proof of address.
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Valuation: An independent RICs surveyor will also visit your home to assess the value of your property for equity release purposes.
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Offer: You'll be issued with a lifetime mortgage offer following a satisfactory valuation, including full terms and conditions for your approval.
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Legal advice: Your solicitor will get a copy of the offer and arrange a meeting with you. They must provide you with independent legal advice as part of the process and they must also witness the signing of the documents.
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Completion: The last stage is completion. Your solicitor will transfer your funds to you, allowing you to start using it for the things that matter to you.
Read more about your equity release journey here.
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, and all of our plans come with several assurances, including the no negative equity guarantee, provided terms and conditions are met.
ⓘ 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.
Before you release equity, it's a regulatory requirement to get specialist advice. 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. 17,000+ excellent Trustpilot reviews makes us the UK's most trusted equity-release specialist.
Page last updated: Monday 16 December 2024