Drawdown Lifetime Mortgage

As with a standard lifetime mortgage, the drawdown equivalent allows you to release tax-free money that is tied up in your home, which can then be spent on whatever you choose. There are no regular repayments to make and you continue to own 100% of your home.

With a drawdown lifetime mortgage, however, you can access this money more flexibly. Rather than just receiving a lump sum, you have the option to release your cash over time, as and when you need it. This means that you can accrue a reduced amount of interest and also limit or prevent any impact that the additional funds may have on means-tested state benefits, should you currently receive any. The total amount that you have borrowed, plus any interest accrued, is only repaid once you pass away or permanently vacate the property e.g. move into long-term care.

Drawdown lifetime mortgages will often be offered at a slightly higher interest rate, to reflect the added convenience that they offer.

Advantages

• Plans avaialble from the age of 55
• The cash you release is tax free and can be spent on whatever you like
• Rather than take all of the funds up-front, you can release equity over time, as and when it suits you
• Because you are only taking what you need, when you need it, you could accrue a reduced amount of interest
• You continue to own 100% of your home, thereby benefiting fully from any future increase in its value
• There are no repayments to make
• The 'no negative equity' guarantee ensures that you can never pass on debt in your estate
• Plans are available that allow you to guarantee an inheritance for your family
• All plans are regulated by the Financial Services Authority

Disadvantages

• The size of the mortgage will grow over time, although this can be limited by only releasing what you need, when you need it
• Your tax position and eligibility fo means-tested benefits may be affected, as might your options for moving or selling your home in the future
• If you want to increase the amount of equity released beyond the original amount agreed, you would normally have to apply for a further advance, which would not be guaranteed
• The amount that you will leave as an inheritence is likely to be reduced
• If you wish to pay off the plan early, you may have to pay an early repayment charge - these differ from plan to plan.
• You can't usually raise as much with a drawdown lifetime mortgage as you could with a reversion plan

Common Questions

• How will equity release benefit me?
• What types of equity release are available?