A higher maximum cash drawdown scheme is now available using the enhanced lifetime mortgage range.Interest is only charged on the actual amount withdrawn, not on funds left in reserve with the provider.Drawdown schemes offer flexibility as to when and how much can be withdrawn.What are the advantages of drawdown lifetime mortgages? However, before jumping straight in, we advise speaking to one of our specialist drawdown lifetime mortgage advisers for a full evaluation of your circumstances. By keeping this figure within the guidelines set out by the DWP, you can theoretically avoid losing any mean-tested benefits you already claim for when you take out equity release. With bank savings limits imposed by the Department of Work and Pensions (DWP) and local authorities, it’s important balances are not breached by a release of equity, as this has the potential to affect one’s eligibility for certain means tested benefits.īy using a drawdown lifetime mortgage, we can tailor the expected initial amount to be spent in conjunction with any existing bank balance. One of the main reasons people choose drawdown lifetime mortgages is because they are less likely to impact means-tested benefits. The interest rate applicable on the cash drawdown will be at the rate applicable at the time of withdrawal.ĭrawdown equity release and means-tested benefits Lenders do not charge any administrative or application fees for this, and cash drawdowns usually only take a matter of weeks to receive funds. Should additional funds be required in the future, then you can make a drawdown request which can usually be taken in smaller amounts. Any remaining cash will then be held by the lifetime mortgage provider in a reserve facility. Once the drawdown facility is known, you can then select how much tax-free money you wish to withdraw. This amount is based on the provider’s loan-to-value percentages, which increase as you get older and so the older you are, the bigger the cash facility you are likely to be offered. The lender will then initially calculate your cash reserve facility based on the age of the youngest homeowner in your property, along with the value of your property and in some cases - the health of the applicant. You must own your main residence and be over the age of 55 if you are to release equity from your property. This means you are never charged interest on the monies left with the lender, only that which you withdraw. A drawdown facility eliminates the need to leave unused equity release funds in the bank, and, instead, leaves surplus cash funds with the lender instead. Today, by taking a smaller initial lump sum, it means less interest is charged (which means a lower balance) and more equity is retained in the property for future use, if required. This money was invariably left sat in a bank account, earning less interest than that being charged on the equity release. What is a drawdown lifetime mortgage?ĭrawdown equity release schemes were first developed in response to old plans, where homeowners looking to budget over the long-term needed to consider how much money they would likely need in the future. The drawdown lifetime mortgages we advise on offer flexible management over the frequency and amount of equity withdrawn from your property during the lifetime of your equity release loan. Equity Release Supermarket Equity Release Plans Lifetime mortgages Drawdown plans Drawdown lifetime mortgages Mark Gregory checked this page for accuracy on 5th May 2022.Īs one of the most popular lifetime mortgages, drawdown equity release plans provide a flexible cash reserve facility that offers easy access to your funds.
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