Drawdown Plans

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 scheme.

The main difference with a drawdown plan 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 'draw down' the cash in stages when you want to.

Advantages of a drawdown lifetime mortgage

• You can draw down 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 will accumulate more slowly than with a regular lifetime mortgage if you don't draw down all of your cash at once 
• 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

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 plan, especially at younger ages
• If you repay the lifetime mortgage loan early, you may have to pay an early repayment charge

If you are thinking about taking out an equity release plan, you should read through 'Is it right for me?' carefully.

This is a lifetime mortgage. To understand the features and risks ask for a personalised illustration.