What is a Lifetime Mortgage drawdown facility?
There are lots of different options when it comes to lifetime mortgage products, with many lenders offering plans with a drawdown facility. This means that instead of releasing equity from your home as a single lump sum, you can take out an initial advance and then the rest you are able to draw from as and when you like while maintaining full ownership of your property.
This allows you to flexibly manage your equity and provides quick and easy access to funds without further administration costs.
Am I eligible for a drawdown lifetime mortgage?
You have to own your property and be over the age of 55 to be eligible for a lifetime mortgage.
There are also a number of variables that can affect how much you borrow, including your health, your property’s value and the type of property you live in. Our advisers can discuss your circumstances and contact suitable lenders that are likely to approve your application.
What is the process?
When you apply for a drawdown lifetime mortgage, your lender will calculate the cash facility based on loan-to-value percentages. Once this is calculated, you can decide on how much money you would like to withdraw. The remaining cash will be held by the lender in the drawdown facility and can be accessed in a matter of weeks if you need it.
The drawdown lifetime mortgage will only have to be paid back when you die or move into long-term care. In these circumstances, your property will be sold and the money from the sale will be used to pay off the loan.
What about interest rates?
You will never be charged interest on the cash left in the reserve with the lender – you are only charged interest on what you decide to withdraw.
What are the benefits of a drawdown lifetime mortgage?
The main benefit of opting for a drawdown lifetime mortgage as opposed to releasing equity as a cash lump sum is that you have the freedom to release money as and when you need it and it can be spent on whatever you wish.
By taking out smaller amounts of cash, a drawdown lifetime mortgage is less likely to affect your state benefits.
Finally, by only paying interest on the money that you draw down, there is a reduced impact on inheritance and the amount you can leave for your loved ones.
It is important that you get specialist advice before applying for an equity release plan. We have arranged a number of successful drawdown lifetime mortgages for our clients and have built strong relationships with a number of UK lenders.
We are here to support you from application to completion. Contact us today for a free, no-obligation consultation.
