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Drawdown Lifetime Mortgages

As the name suggests, Equity release schemes allow you to increase your income by releasing part of the value of your home. Whether this is for a new car, a Caribbean cruise, home improvements, to pay off existing debts or to improve your standard of living, drawdown lifetime mortgages are a more flexible way of releasing equity that is tied up in your home.

Drawdown lifetime mortgages vs. lifetime mortgages

A drawdown lifetime mortgage comes under the same umbrella as a lifetime mortgage if you're considering releasing equity on your home. As with a standard lifetime mortgage, releasing equity couldn't be simpler. The drawdown lifetime mortgage lets you free up a percentage of tax-free money that is tied up in your home. There are no regular repayments to make and you remain the homeowner until the house is sold.

However, with a drawdown lifetime mortgage you can access this money much more flexibly. Instead of receiving one cash lump sum at the beginning of your agreement, you have the choice of taking a smaller cash amount at the start followed by further options of releasing equity or (drawing down) more cash as and when you need it.

For example, perhaps you agree to releasing equity of £50,000 but want just £20,000 now to spend on home improvements. You still have the potential to withdraw another £30,000 tax-free in the future to spend on whatever you like.

Advantages of releasing equity with a drawdown mortgage

This brings us round to one of the key advantages of releasing equity with a drawdown lifetime mortgage. You will only pay interest on the amount that has been drawn down. So using the example above, interest is only charged on the initial £20,000 drawdown and not the full £50,000. Of course, the more equity you release over time then interest is charged on this amount also, at the prevailing rate of interest.

It's worth noting that drawdown lifetime mortgages are usually offered at a slightly higher interest rate in order to reflect the added convenience that they offer the borrower but Age Partnership research the whole of the market to bring you the most competitive rates available. Like a lifetime mortgage, the total loan is repaid when the house is sold.

Independent equity release advice from Age Partnership

For more information about releasing equity on your home call Age Partnership on 08080 555 222 for specialist independent advice. We'll tell you more about equity release and if it's suitable for your circumstances.

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