Financial Planning Advisors
drawdown lifetime mortgages

drawdown lifetime mortgages

This is similar to a lifetime mortgage; but with added flexibility. The cash can be released over time, as and when you need it. Because you only accrue interest on the funds once you have taken them, this can reduce the amount you pay over time (when compared with a lump sum)

As with a standard lifetime mortgage, the drawdown equivalent allows you to release tax-free money that is tied up in your home, which can then be spent on whatever you choose. With a drawdown Lifetime Mortgage, there are no regular repayments to make and you continue to own 100% of your home. 

Drawdown Lifetime Mortgages offer greater flexibility 

With a drawdown lifetime mortgage, however, you can access this money more flexibly. Rather than just leaving a lump sum, you have the option to release your cash over time, as and when you need it. This means that you can accrue a reduced amount of interest and also limit or prevent any impact that the additional funds may have on means –tested state benefits, should you currently receive any. The total amount that you have borrowed, plus any interest accrued, is only repaid once you pass away or permanently vacate the property e.g move into long term care. 

Advantages of Drawdown Lifetime Mortgages

  • Plans available from the age of 55 
  • The cash you receive is tax-free and can be spent on whatever you like 
  • Rather than take all of the funds up front, you can release equity over time, as and when it suits you 
  • Because you are only taking what you need, when you need it, you could accrue a reduced amount of interest
  • You continue to own 100% of your home, thereby benefiting from any future increase in its value 
  • There are no repayments to make with a drawdown lifetime mortgage 
  • The’ no negative equity’ guarantee ensures that you can never pass debt to your estate 
  • Plans are available that guarantee an inheritance for your family 
  • All plans are regulated by the Financial Services Authority  

Disadvantages of Drawdown Lifetime Mortgages 

  • The size of the mortgage will grow over time, although this can be limited by only releasing what you need, when you need it 
  • Your tax position and eligibility for means-tested benefits may be affected, as might your options for moving or selling your home in the future  
  • If you want to increase the amount of equity released beyond the original amount agreed, you would normally have to apply for a further advance, which would not be guaranteed
  • The amount that you will leave as inheritance is likely to be reduced 
  • If you wish to pay of this type of equity release plan early, you may have to pay an early repayment charge- these differ form plan to plan 
  • You cant usually raise as much with a drawdown lifetime mortgage as you could with a reversion plan 

 

Call us free for CONFIDENTAL independent financial advice on 0800 0742684

Other Products

drawdown lifetime mortgages: This is similar to a lifetime mortgage; but with added flexibility. The cash can be released over time, as and when you need it. Because you only accrue interest on the funds once you have taken them, this can reduce the amount you pay over time (when compared with a lump sum)

home reversion plans: home reversion plans

interest only lifetime mortgages : interest only lifetime mortgages

lifetime mortgages: lifetime mortgages

Safe Home Income Plans (SHIP): SHIP equity release plans are completely safe and come with a set of guarantees, shown via the link below, that act to protect your financial future.

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HBFS Equity Release Ltd
Regus Building
Central Boulevard
Blythe Valley Business Park
Shirley B90 8AG

Tel: 0121 459 4000
Authorised and Regulated by the Financial Services Authority

Formerly Helen Brown Financial Services Limited

Registered no: 304106

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EQUITY RELASE MAY INVOLVE A LIFETIME MORTGAGE OR HOME REVERSION PLAN. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONAL ILLUSTRATION.