What is a drawdown lifetime mortgage?
A drawdown lifetime mortgage offers more freedom than a lump sum plan, allowing you to release money when you like. Firstly, you agree an overall sum of money you can borrow. You can take an initial lump sum and then withdraw smaller amounts when you need it (subject to minimum amounts).
As interest only accrues on the money you've released, you could potentially save a considerable amount in interest over the lifetime of the mortgage.
In addition to the features and considerations of a lifetime mortgage, the details of a drawdown lifetime mortgage are as follows:
- These plans are more flexible than lump sum plans, meaning you can adapt to your changing needs in retirement
- These plans can help you organise your finances, so you may not miss out on means-tested benefits
- You can use the money you release for any purpose and can cover specific expenses, including home improvements or to pay university fees
Comparison between a lump sum lifetime mortgage and a drawdown option
Comparison between a standard lifetime mortgage and a drawdown option of £64,000 released over 15 years with an interest rate of 6.1% AER. For illustrative purposes only. The interest rate applied to drawdowns will be the interest rate at the time of the drawdown.
Swipe
| Options | Initial advance | Drawdown year 5 | Drawdown year 7 | Drawdown year 9 | Drawdown year 10 | Interest charged (15 years) | Total owed (15 years) |
| Single advance | £64,000 | n/a | n/a | n/a | n/a | £91,565 | £155,565 |
| Drawdown | £20,000 | £15,000 | £8,000 | £7,000 | £14,000 | £53,388 | £117,388 |
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Things to consider
Your specialist equity release adviser will explain:
- You have to get advice before releasing tax-free cash from your home. Please read all our information and make sure it's right for you
- A lifetime mortgage, which is a loan secured against your property, is the most popular form of equity release and you’ll retain full ownership of your home
- All of our plans meet the Equity Release Council standards and come with several protections, including the no negative equity guarantee, which means you’ll never owe more than your home’s value
- Equity release reduces your estate's value and may affect any means-tested benefits you're eligible for