A drawdown lifetime mortgage plan has the same advantages and disadvantages as a regular lifetime mortgage, as well as a few more that are unique to this kind of home equity release.
The main difference with a drawdown plan and other forms of home equity release is that you don’t request the full sum of money available to you immediately. Instead, you decide on a maximum amount of equity you want to release, and ‘drawdown’ the cash in stages when and if you want to. The minimum age is 55.
You can drawdown cash by making withdrawals as and when you need them, or you may be able to request a monthly income
You only pay interest on the amount of equity released from your home, so interest could accumulate more slowly than with a regular lifetime mortgage
You are in control of your money as you can release cash when it suits you
You retain full ownership of your home
Drawdown plans may be available to younger people (aged 55+)
Some drawdown plans let you guarantee an inheritance for your family
Regulated by the Financial Services Authority
Disadvantages of a drawdown lifetime mortgage:
Interest rates are usually higher on a drawdown lifetime mortgage plan than they are on a standard lifetime mortgage
There are restrictions on the minimum amount you can release
The amount you can leave as an inheritance will be reduced as with all forms of home equity release
The interest applied to the drawdown lifetime mortgage plan can grow quickly as it is compounded
You can’t usually raise as much money through equity release with a drawdown lifetime mortgage as you could with a reversion plan, especially at younger ages
If you repay the lifetime mortgage loan early, you may have to pay an early repayment charge
Your tax position and certain state benefits may be affected
To find out more about equity release:
Call our friendly team on 0800 773 4849 or 0208 789 2862.
Or complete the short enquiry form to the right of this page
