Drawdown Lifetime Mortgages

Drawdown is a type of lifetime mortgage that enables you to take the cash from your home in chunks, as and when you need it.

A Drawdown lifetime mortgage allows you more freedom to release your money when you like. Your lender agrees to an overall sum of money you can borrow, which is set aside for you.

You can take an initial lump sum and then withdraw smaller amounts when you need it (subject to minimum amounts).

As you only pay interest on the money you have drawn down, you can save a considerable amount in interest over the lifetime of the plan.

Advantages of Drawdown lifetime mortgages

  • You can reduce the cost of equity release by only taking as much money from your home as you need at any one time
  • Your beneficiaries could end up with a greater inheritance, compared to if a lump sum plan is taken out
  • These plans are more flexible than lump sum plans, meaning you can adapt to your changing needs in retirement
  • These plans can help you to organise your finances so that you don’t miss out on means-tested benefits
  • You can use the money you release for any purpose and can cover specific expenses, including home improvements or to pay university fees

Disadvantages of Drawdown lifetime mortgages

  • There is a minimum limit on the size of the lump sum you can take initially
  • Some providers may not guarantee the reserve facility that you can draw down from and it could be withdrawn at a later date
  • Future withdrawals can be at a higher interest rate than the initial lump sum
  • You don’t know how much of your property value will be left to your beneficiaries, but you may be able to guarantee a percentage of the value as inheritance
  • The loan provider has a first legal charge against your property – when the property is sold, the loan and interest will be paid to the provider and the surplus goes to your estate
  • Early repayment charges may apply if you decide to repay the loan
  • A Drawdown Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to state benefits

What could you do with a lifetime mortgage make?

The uses for a Lifetime Mortgage are endless, as long as it’s a legal you can use the money for what you want, here some typical examples:

Family  – You could give family members their inheritance earlier, which could help with the deposit on their first home, for example. Doing this would reduce the value of any future inheritance. If you give the money away, the recipient may have to pay inheritance tax in the future.

A holiday – The holiday of a lifetime for you, with friends or for the whole family.

Interest-only mortgage – A lifetime mortgage could be used to repay the balance of an interest-only mortgage. You may have to pay an early repayment charge to your existing lender.

Income – It could supplement your pension income and improve your general standard of living.

Debt– You could relieve the pressure of monthly repayments and pay off any outstanding debts, although it’s important to think carefully about securing a debt against your home.

Home improvement– Many people use a lifetime mortgage to improve their home or make it more manageable so they can stay in it for longer.

How we can help you

  • No Negative Equity Guarantee
  • No monthly payments, or optional payments
  • No need to move home
  • Choose from a lump sum, or supplement your income.
  • Available from the age of 55 years and upwards
  • Protect some equity for inheritance
  • We only recommend lenders that are members of the
  • Equity Release Council (formally SHIP)
  • Home reversion and lifetime mortgage schemes available

You should discuss with your family and intended beneficiaries to your Will that you are considering an equity release plan.

You should also seek independent legal advice.

Releasing equity from your home is generally seen as a long-term commitment, it is not ideal for short-term borrowing.

Be confident, our advisers are here to help you make an informed decision and will tell you straight away if equity release isn’t right for you, you may even be eligible  for a more conventional type of mortgage.

This is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.

There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £1995 or 1.5% of the loan