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Drawdown plans (drawdown lifetime mortgages)
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.
The main difference with a drawdown lifetime mortgage is that you don't
request the full sum of money available to you immediately. Instead, you
decide on a maximum amount of equity you want to release, and 'drawdown'
the cash in stages when you want to.
Advantages of a drawdown lifetime mortgage
- You can drawdown cash by making withdrawals as and when you need
them, or you may be able to request a monthly income
- 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 as you can release cash when
it suits you
- You retain full ownership of your home
- Drawdown plans may be available to younger people (aged 55+)
- Some drawdown plans let you guarantee an inheritance for your
family
- All equity release schemes are regulated by the
Financial Services Authority, including drawdown plans
Disadvantages of a drawdown lifetime mortgage
- Interest rates are usually higher on a drawdown plan than they are
on a standard lifetime mortgage
- 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 is not guaranteed
- There are restrictions on the minimum amount you can release
- The amount you can leave as an inheritance will be reduced
- The interest applied to the drawdown mortgage can grow quickly as it
is compounded
- You can't usually raise as much money through equity release with a
drawdown lifetime mortgage as you could with a reversion scheme,
especially at younger ages
- If you repay the lifetime mortgage loan early, you may
have to pay an early repayment charge
How to find the right equity release plan
There are currently over 40 equity release plans to choose from, and
you can save your estate thousands of pounds if you choose the right
one.
That's where we can help. Our adviser partners search the whole equity
release market on your behalf and offer award winning independent
financial advice about equity release that's tailor made to your
individual circumstances. They can guide you through the different
types of equity release plans available to find the best possible plan for
your needs.
Simply complete our online enquiry
form and an adviser will be in touch as soon as possible to discuss
your requirements.
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