Drawdown plans

A drawdown lifetime mortgage has the same advantages and disadvantages as a regular lifetime mortgage, as well as a few more that are unique to this kind of equity release plan.

Advantages of a drawdown lifetime mortgage

• You can drawdown cash by making withdrawals as and when you need them, or you may be able to request a monthly income
• You only pay interest on the amount of equity released, so interest could accumulate more slowly than with a regular lifetime mortgage
• You are in control of your money as you can release cash when it suits you
• You retain full ownership of your home
• Drawdown plans may be available to younger people (aged 55+)  
• The older you are the more you can release
• All equity release schemes are regulated by the Financial Services Authority

Disadvantages of a drawdown lifetime mortgage

• 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 is not guaranteed and interest rate may be different to your original loan
• There are restrictions on the minimum amount you can release
• The amount you can leave as an inheritance will be reduced
• The interest applied to the drawdown mortgage can grow quickly as it is compounded
• You can't usually raise as much money through equity release with a drawdown lifetime mortgage as you could with a reversion scheme, especially at younger ages
• If you repay the lifetime mortgage loan early, you may have to pay an early repayment charge 

The main difference with a drawdown lifetime mortgage is that you don't request the full sum of money available to you immediately. Instead, you decide on a maximum amount of equity you want to release, and 'drawdown' the cash in stages when you want to.