Drawdown lifetime mortgages
In simple terms a drawdown lifetime mortgage allows you to receive regular cash payments from your scheme rather than a one off sump sum. It provides you with greater control and flexibility as to when you receive your money, and you benefit from only being charged interest on the amounts you receive. This type of lifetime mortgage provides an alternative solution for those who don’t need to access all of their money at once.
With a drawdown lifetime mortgage you agree with your provider a maximum facility or amount of money available to drawdown. You can then access this money as and when you need it. You may for example drawdown an initial amount of money you need now, and then save money in the scheme to access later on or as and when you require it.
How much can I receive under the drawdown lifetime mortgage?
As with any type of lifetime mortgage, with a drawdown lifetime mortgage the actual amount available will depend on personal factors such as your age, health condition and your home’s value. Our equity release experts will be able to provide you with an accurate quote, and discuss the options that are available to you.
Do I have to make any mortgage repayments?
With a drawdown lifetime mortgage any interest incurred can be rolled up (compounded) and repaid from your estate at the end of the scheme. However, depending on the options you choose you can also opt to make regular interest repayments to reduce the overall debt at the end of the scheme, which may then increase the amount of money you leave to any beneficiaries of your estate.
Can I continue to live in my home?
You can continue to live in and enjoy your home as normal until you either die or move into long term care. There is also a no negative equity guarantee which means that the amount you owe will never be more that the value of your home. This is particularly reassuring in the event that house prices were to drop considerably in the future.
What are the main advantages?
- Similar to a bank overdraft, you are only charged interested on the amounts you receive rather that the whole facility available.
- You are provided with more control and flexibility as to when you receive your money.
What are the main disadvantages?
- You may be provided with a smaller facility than if you were to go with the one off lump sum option.
Where can I get further advice?
If you are interested in learning more about drawdown lifetime mortgages or any type of equity release then our experts can help. They are regulated equity release professionals that can provide you with independent advice and guidance on the options available. They are also members of the Equity Release Council and abide strictly by their code of conduct.