Drawdown Lifetime Mortgages allow you to withdraw money as and when you need it, rather than taking out one initial lump sum, which also means you are likely to pay less interest whilst retaining more equity in your home.
By taking this option, you can draw down further payments in the future whilst still retaining 100 per cent ownership of your property.
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You can use the equity you release for any purpose whilst still owning your property.
The flexibility offered by a Drawdown Lifetime Mortgage allows many people to better manage their finances and borrowing, and this route is preferred by many as you are likely to accumulate less interest.
Some lenders offer a more flexible lifetime mortgage, known as a ‘drawdown lifetime mortgage'. The flexibility allows you take a smaller amount of equity in the beginning and then drawn down further borrowings when you need them.
Due to the fact that you only pay interest on the money drawn down, the overall costs can work out to be much lower than a standard lifetime mortgage.
Obviously, elements of a typical lifetime mortgage apply to drawdown lifetime mortgage too, although there are some additional features of how it works to consider.
Firstly, you can reduce the overall costs of equity release by choosing to only take as much money as you need at any one time.
Secondly, your family could reap the rewards of a greater inheritance, compared to if a lump sum lifetime mortgage is taken out.
Lastly, drawdown lifetime mortgages are more flexible, allowing you to adapt and change throughout your retirement.
The loan provider will have first legal charge on your property, if it is sold, resulting in the loan amount and interest to be will be paid off before any surplus becomes inheritable.
Each individual circumstance is assessed accordingly, and amounts and rates may vary. However, it’s estimated that you could release equity to the value of between £10,000 and £600,000 if you live in England, or up to £250,000 for the rest of the UK.
Drawdown lifetime mortgages do not suit everybody. Individual circumstances play a huge part on whether a drawdown lifetime mortgage is the best option for you. There is a minimum limit on the size of the amounts you draw down and future withdrawals can come with higher interest rates.
Also, you can’t be entirely sure of the exact amount of value in your property which will be left to your beneficiaries
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