A lifetime mortgage is a loan secured against your home and is a way for homeowners aged 55 and over to unlock some of the value tied up in their home. There are typically no monthly repayments as 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.
But did you know that you can receive your tax-free funds in two different ways? The two forms of lifetime mortgages are a lump sum and drawdown. With our specialist advice, why not let us help you work out the approach that’s most suitable for you and your personal circumstances.
ⓘ Equity release is a lifetime commitment - check the benefits and drawbacks before going ahead.
Get in touch with The Equity Release Experts now on 0800 188 4812 or by requesting a callback. We’ll talk you through the flexible features available with a lifetime mortgage.
As with any form of equity release, neither lifetime mortgage option is without their risks and things that you’ll need to think about first. Our equity release advisers are here to make sure you know exactly what’s what if you’re thinking about releasing equity.
With a lump sum lifetime mortgage, there really is no mystery to it. When you choose to unlock some of the value of your home with a lump sum lifetime mortgage, you’ll receive your funds in one lump sum.
They typically come with a lower interest rate than a drawdown lifetime mortgage, which can help reduce your total cost of borrowing
Your interest rate is fixed for the life of your plan, whereas any future release with a drawdown lifetime mortgage is subject to the prevailing interest rate at the time
As compound interest will be rolled up on what you release, you could owe more if you release all your funds in one go and will limit your future borrowing options
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
If you decide on a drawdown lifetime mortgage, you agree an overall amount you can access. You'll receive an initial lump sum of tax free funds, after which you can take more from the amount still available when you next need it (subject to minimum amounts).
Why not use our equity release calculator to see what you could unlock?
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.
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% MER (Monthly Equivalent Rate) (future drawdowns will be charged at the prevailing interest rate).
Customer A takes all their cash in one go through a lump sum lifetime mortgage, so interest is charged on the full release amount from day one.
Customer B takes an initial loan of £51,703, so interest is only charged on this lower release amount. They then make two further £15,000 drawdowns over time, taking their total release to £81,703.
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.
Your specialist equity release adviser will explain:
Your equity release adviser will also outline the following important things to think about:
Take your first step in finding out if equity release is the right option for you
Here at The Equity Release Experts, we help you make a choice that’s right for you. We understand that each one of our customers is different, and so are their current situations and future aims. And it means our advice is tailored accordingly to make sure equity release works for you.
We'll compare plans from across the market. Unless you decide to go ahead with a plan, our service is completely free of charge, as our fixed advice fee of £1,799 is only payable on completion of a plan.
If you’re not sure if a lump sum or drawdown plan is right for you, talk to one of our expert equity release advisers – call 0800 188 4812 or request a callback for a free initial consultation and expert advice you can trust. If equity release isn't right for you, then we'll tell you.
If you want to find out more about lifetime mortgages, call on our expert equity release advice you can trust – and make the decision that’s right for you. You can use our equity release calculator to see just how much you could access – or download our free guide to find out more about your options.