Drawdown lifetime mortgages have been designed to accommodate those who don’t need to release a large cash lump sum at the outset. Instead, you are able to release smaller amounts as and when you need the cash, making it a more flexible option that you can make work for you.
Figures released through our Market Monitor Half Year Report 2011 found that drawdown lifetime mortgages accounted for 75 per cent of equity release sales in the first six months of 2011, compared with 72 per cent in 2010.*
So why is drawdown so popular? At Key, we believe that this is down to the added flexibility of the plan. Customers who opt for a drawdown lifetime mortgage are able to take full control of how and when they release the cash from their home, with the added appeal of the interest only accruing on the cash released.
Advantages of a Drawdown Lifetime Mortgage
- A pot of money is set aside for you to draw from as and when you need it.
- You only pay interest on the money that you release, which could potentially save you a great deal of money and allow more to be left as part of your estate.
- You can spend the cash you release as and how you wish.
- There are typically no monthly repayments to meet.
- You retain full ownership of your property.
- If the property increases in value, your estate will still benefit from this.
- There is an option to repay back the loan at any time.
- Some lifetime mortgages allow you to guarantee an inheritance.
- SHIP plans come with a ‘no-negative equity’ guarantee to ensure the amount you owe will never exceed the value of your home. This means that there will never be any debt left for your loved ones to pay when you pass away.
Disadvantages of a Drawdown Lifetime Mortgage
- If you wish to increase the amount of cash beyond the original total amount agreed, you will have to apply for a further advance, which isn’t always guaranteed.
- There are restrictions on the minimum amount that must be taken.
- The amount you leave as an inheritance is reduced. Some plans, however enable you to protect a percentage of your property so you can secure an inheritance for your loved ones.
- If you decide to repay the loan early then an early repayment charge may apply.
- Your entitlement to state benefits may be affected, however an equity release specialist will be able to review your situation in more detail and tell you whether there will be an impact or not.
Further information about a drawdown lifetime mortgage can be given to you over the phone or within the comfort of your own home with one of our dedicated local equity release advisers. They will be able to tell you which type of equity release scheme will work best for your individual circumstances, or whether it is in fact, right for you at all.
Book an appointment today or request a call back from one of our equity release specialists.
Or you could request a FREE equity release guide which we will post straight to your home.
Before you consider an equity release scheme, please read Is it right for you? carefully.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
