Drawdown Schemes

A drawdown lifetime mortgage has the same advantages and disadvantages as a regular lifetime mortgage as well as a few more that are unique to this kind of equity release plan. Many people don’t require a one off amount from Equity Release; some spending plans may be years ahead. A drawdown Lifetime Mortgage provides a pre approved facility, which can be drawn down gradually, as and when you need it.

It enables you to borrow what you need now with the facility to take further funds later on with minimal paperwork.

This is usually preferred to releasing a larger sum only to keep in your bank account pending future plans.

Advantages of a drawdown lifetime mortgage

• You can drawdown cash by making withdrawals as and when you need them.

• You only pay interest on the amount of equity released, so interest could accumulate more slowly than with a regular lifetime mortgage.

• You are in control of your money and can release further funds when it suits you

• You retain full ownership of your home.

Disadvantages of a drawdown lifetime mortgage

• If you want to increase the amount of equity released beyond the original pre-approved facility, you would then have to apply for a further advance, which is not gauaranteed and may involve another valuation fee.

• There are restrictions on the minimum amount you can release.

• The amount you leave as an inheritance will be reduced

• The interest applied can grow quickly as it is compounded.

• If you repay the loan early, you may have to pay an early repayment charge

• You can’t usually raise as much money with a lifetime mortgage as you could with a home reversion plan, especially at younger ages.

We discuss this option with all our clients.