Equity Release Drawdown lifetime mortgages have been designed to accommodate those who don’t need to release a large cash lump sum at the outset. Instead, you are able to release smaller amounts as and when you need the cash, making it a more flexible option that you can make work for you.
Figures released through a recent Market Monitor Report showed that more than £471 million of housing wealth was released in the third quarter of 2015 through equity release with drawdown lifetime mortgages accounting for 65.5% of all equity release sales.*
So why is equity release drawdown so popular? At RM Mortgage Solutions, we believe that this is down to the added flexibility of the plan. Customers who opt for a drawdown lifetime mortgage are able to take full control of how and when they release the cash from their home, with the added appeal of the interest only accruing on the cash released.
Advantages of an Equity Release Drawdown Lifetime Mortgage
- A pot of money is set aside for you to draw from as and when you need it.
- You only pay interest on the money that you release, which could potentially save you a great deal of money and allow more to be left as part of your estate.
- You can spend the cash you release as you wish.
- There are typically no monthly repayments to meet.
- You retain full ownership of your property.
- If the property increases in value, your estate will still benefit from this.
- There is an option to repay back the loan at any time.
- Some lifetime mortgages allow you to guarantee an inheritance.
- SHIP plans come with a “no-negative equity” guarantee to ensure the amount you owe will never exceed the value of your home. This means that there will never be any debt left for your loved ones to pay when you pass away.
Disadvantages of an Equity Release Drawdown Lifetime Mortgage
- If you wish to increase the amount of cash beyond the original total amount agreed, you will have to apply for a further advance, which isn’t always guaranteed.
- There are restrictions on the minimum amount that must be taken.
- The amount you leave as an inheritance is reduced. Some plans, however, enable you to protect a percentage of your property so you can secure an inheritance for your loved ones.
- If you decide to repay the loan early then an early repayment charge may apply.
- Your entitlement to state benefits may be affected. However, an equity release specialist will be able to review your situation in more detail and tell you whether there will be an impact or not.
Further information about a lifetime mortgage can be given to you over the phone or within the comfort of your own home if you live in or around the Birmingham area. Your advisor will be able to tell you which type of equity release scheme will work best for your individual circumstances, or whether it is in fact right for you at all.
At RM Mortgage Solutions Ltd we can refer you to an equity release specialist who will be able to provide advice and discuss your options further. Book an equity release appointment today or request a call back on the adjacent form.
Before you consider an equity release scheme, please read Is equity release right for you? carefully.
A lifetime mortgage is a loan secured against your home. To understand the features and risks, always ask for a personalised illustration.
*Key Retirement Solutions Market Monitor Report November 2015.