Drawdown Mortgages
A drawdown mortgage works in a similar way to a regular lifetime mortgage. For example, there are no repayments to make during your lifetime and you still own 100% of your home. However, the main benefit is you do not borrow the full sum of money immediately - instead you decide how much you want to borrow now. You are then free to "drawdown" further cash in stages as and when you want - up to your pre agreed limits. By choosing this method, you can opt for tax free monthly income to increase your spending power each month. This has proven very popular with those whose pension plans haven't provided as much as they had hoped for and seek tax free income rather than a lump sum.
 Contact us / request a call back |
Advantages
- No interest is paid while you are alive, so you will get a higher income compared to say a home income plan or traditional mortgage.
- Most loans offer a fixed rate of interest for the life of the loan to reduce the risk of rising interest rates.
- The schemes are available from age 55 years old and will allow for further borrowing if property prices increase sufficiently.
- You can “draw down” the tax free cash in stages to limit how much interest is added to the loan and therefore leave a greater share of your home to your family.
- You retain 100% ownership of your home
- You retain great control of your money as you decide when it is released.
- The interest you owe grows more slowly as you only borrow what you need, when you need it.
Disadvantages
- Interest payments can increase quickly and typically the amount you borrow doubles every 10 years or so.
- There is an uncertainty about how much you will owe and therefore how much will be left to your family.
- If you die in the early years the debt is likely to be less than compared to a home reversion plan.
- Interest is "compounded" meaning the money you borrow doubles every 10 years to so, approximately.
- Entitlement to certain state benefits may be affected by an increase in your income
Marshall Hope FS Ltd offers independent financial advice for clients seeking equity release plans. To find out which plan, if any, suits your needs the best speak to one of our specialist equity release advisers on 0800 019 7449.
| Contact us / request a call back |
