Many customers come to us having already researched equity release and decided whether they want a lump sum lifetime mortgage or a drawdown plan. But the best plan depends on your own unique situation and may not always be the obvious choice.
A lump sum lifetime mortgage
This is a tax-free sum of money, secured against your home, for you to spend as you wish, for example on home improvements, to clear an existing mortgage, take the trip of a lifetime or help a family member. It’s a regulatory requirement that you get professional advice before taking out a plan.
A drawdown lifetime mortgage
This is also a loan secured against your home but you don’t take the full amount you want to borrow up front. You take an initial sum to meet your short-term needs or dreams and after that you have a reserve pot you can withdraw from as, when and if you choose (Although a drawdown reserve is not always guaranteed). You only pay interest on the amount you’ve taken, from when it’s taken.
Good advice is key
While this seems pretty straightforward, the role of your adviser is to provide good, independent, whole of market advice, and to recommend a plan that is suitable for your needs both now and in the future. That’s why we put so much emphasis on the role of our qualified, expert advisers.
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Things to consider
Our independent, specialist advisers search the whole market to find the right equity release plan for you. They’ll explain all the options available and that taking a plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.
You have to get specialist advice before releasing equity; it’s the only way to do it. The initial consultation is free with no obligation to proceed. If you decide to go ahead with an equity release plan our advice fee, usually 1.99% of the amount released, subject to a minimum of £1,499, is payable only on completion.
With a lifetime mortgage, the most popular form of equity release, you’ll still own your home. As with any kind of mortgage, it’s a loan secured against your home. All equity release plans we recommend have a no negative equity guarantee, which means you’ll never owe more than the value of your home.
You should always think carefully before securing a loan against your home.
If you are considering equity release we recommend that you read through Is equity release right for me?