Drawdown lifetime mortgages are the most popular type of plan and it’s easy to see why.
Once the lender has determined the maximum they will lend you, this is placed in a ‘cash reserve’ facility with them.
Initially you have to borrow a minimum of £10,000 from your ‘cash reserve’, but then after that you are free to borrow as much as you like and as many times as you want to – until your cash reserve is fully used.
The minimum additional borrowing is typically £2,000, which means you can take smaller amounts for smaller expense items, without having to take more than needed.
There is no additional charge for making withdrawals, but the interest rate charged is the one that is current at the time – which may be different from the interest rate at the time you first borrowed.
Once set up with the lender, the money is usually received in your bank account within in a couple of weeks.
As interest is only charged on the amount you borrow (not on money in your cash reserve), this will reduce the final amount of interest to be repaid if you borrow in a series of drawdowns over time - rather than in one large lump sum.
If you are claiming any means-tested benefits, a drawdown lifetime mortgage may not affect your claim as the amount borrowed could be managed to keep under eligibility thresholds – which your local Equity Release Supermarket adviser will be able to talk through with you in detail.