Drawdown Lifetime Mortgage

 

If you’re looking for different types of equity release plans to consider, a drawdown lifetime mortgage might be for you. A drawdown is a type of lifetime mortgage (the most common form of equity release) allowing you to release smaller amounts after your initial release. This allows you to take funds from your home in portions that you control. 

What is a drawdown lifetime mortgage?

A drawdown lifetime mortgage allows you to release funds from your home when you need it, rather than in one lump sum.  At first, you release an initial lump sum and can then release further amounts when required.

Only releasing your funds as and when you need them can be beneficial, for example, you’ll only pay interest on the money you’ve drawn down. It can often be a more cost-effective option, as the interest accrues at a slower pace than if you take out all the funds in one lump sum.

Similar to a lump sum lifetime mortgage, it’s a way of releasing tax-free money from your home without having to sell up and downsize. Enjoy the freedom to access your agreed funds whenever you need with a drawdown lifetime mortgage.

How does a drawdown lifetime mortgage work?

  • You agree an overall sum of money you would like to borrow from your lifetime mortgage provider. This is based on your age, property value and your health and lifestyle choices.

  • You’ll release an initial lump sum from the overall amount of money

  • When you want to draw down any of the remaining funds, you can release them in small amounts as and when you need.

  • Interest is then added to the money that you’ve drawn down.

  • There are no monthly repayments to worry about either! 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. 

Why choose a drawdown lifetime mortgage?

There are many benefits of choosing a drawdown lifetime mortgage over other methods of equity release. It is important, however, that you explore all the options available to you and speak to a specialist equity release adviser about which choice suits your situation.

With a drawdown lifetime mortgage, you will find that your interest may not mount up as quickly because you’re only paying it on the funds that you release, rather than the total amount in your facility. With a lump sum lifetime mortgage, you pay interest on the full amount from the start.

There are no monthly repayments on a drawdown lifetime mortgage either, and the no negative equity guarantee protects you and ensures your beneficiaries will not be left with a lifetime mortgage debt.

How much will it cost?

A drawdown lifetime mortgage has a fixed interest rate on each sum of money you borrow. The total loan and compound interest is usually repaid once you pass away or move into long-term care. Drawdown lifetime mortgage interest rates can vary, the initial release will be at the interest rate set at the time and then any future drawdown interest rates will be at the prevailing rate.

Use our handy calculator to see what you could borrow. You can also speak to our experienced team, who will be on hand to help you.

It’s important to remember that there may be additional costs, such as solicitors’ fees, admin fees and The Equity Release Experts advice fee.

Ready to see if a drawdown lifetime mortgage is right for you?

Remember, you must get advice before you take out any equity release product. If you want to do some more of your own reading, our equity release guide is free to download and can provide you with more information.

So, if you’re ready to start exploring your options, our friendly and experienced team can be reached via our quick contact form or on 0800 188 4812 Lines are open Monday-Friday 9am-5.30pm. 

Unless you decide to go ahead, our service is completely free of charge as our fixed advice fee of £1,499 is only be payable on completion of a plan.

 

Things to consider with equity release

  • Equity release may involve a lifetime mortgage which is a loan secured against your home.

  • 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.

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

  • Unless you decide to go ahead, our service is completely free of charge as our fixed advice fee of £1,499 is only payable on completion of a plan.