Drawdown Lifetime Mortgage
This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these plans can often prove to be more cost-effective.
- ✔ The cash you release is tax free and can be spent as you wish.
- ✔ Access your money with flexibility, you can release equity over time, as and when it suits you.
- ✔ Cost-effective because you only pay interest on the cash you choose to take out.
- ✔ You continue to own your home, thereby benefiting from any future increase in its value.
- ✔ There are no monthly repayments to make with a drawdown lifetime mortgage.
- ✔ The ‘no-negative-equity’ guarantee ensures that you can never pass on debt to your estate.
- ✔ Plans can allow you to protect a percentage of your property value so that your family could inherit a part of the property value.
- ✗ The size of the mortgage will grow over time, this is because of the roll up of interest.
- ✗ 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 and may be time limited. You would need to seek product T&Cs for more details.
- ✗ Your tax position and eligibility of means-tested benefits may be affected now and in the future, as might your options for moving or selling your home in the future.
- ✗ The amount that you will leave as an inheritance will be reduced each time you release money.
- ✗ If you wish to pay off the equity release plan early, you may have to pay an early repayment charge these differ from plan to plan
Other alternatives to equity release
An equity release plan is not the only option if you wish to free up some cash in retirement. Downsizing the property, or borrowing money from a close friend or family member, could be a preferable alternative to releasing equity from the home.
Please call us today for a no-obligation chat on Freephone 08080 555 222 . Our friendly advisors are ready to answer any questions you may have.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. To understand the features and risks ask for a personalised illustration.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.