We know how confusing it can be when you looking at different types of equity release products, such as a drawdown mortgage.
Making a wrong and bad decision can cost you tens of thousands of pounds which is why we want to make sure you fully understand everything you need to know. Therefore, in the guide we will clearly:
As care becomes a more common requirement for older people and their families, funding options continue to cause confusion and concern.
Often it can feel difficult to know how to fund the care required – and find enough money to cover the costs.
The good news is that the number of financial options available to those considering care continues to grow. This would include the use of a drawdown lifetime mortgage, which is a type of equity release.
Before we start here is a short video to explain how equity release works.
Here is a short video explaining how a drawdown mortgage works.
You can read here more about how an equity release scheme works.
Fortunately help is on hand to enable you to navigate the financial playing field and choose the best possible option for you or your relative.
With so many options on the table, the financial decision-making aspect of sourcing care can often appear daunting.
Which plan should you choose? How do you know which choices will offer the best benefits for you both now and in the future? At UK Care Guide we focus on simplifying the process, covering each option in turn to help you to make an informed and confident decision.
In this article we focus on the drawdown mortgage – a flexible plan fairly new on the market that is increasing in popularity amongst over sixties requiring care or needing to release funds for home improvement or retirement.
A drawdown lifetime mortgage has many advantages attached – but it might not be right for you. This article will help you determine whether it is the right option for you.
A drawdown mortgage is a type of equity release scheme, offering greater flexibility and freedom compared with traditional plans.
The lending company agrees to allow you to borrow a set sum of money, which is set aside for you. You then have the option to take an initial lump sum, with the opportunity to withdraw smaller amounts as and when required.
This often represents a more cost-effective approach to equity release in its traditional format, as you only take as much money as you need out of your property. That means that over the duration of the plan you can expect to pay less interest on the same amount of money obtained from a drawdown mortgage than with a traditional scheme.
Drawdown mortgages have many benefits – which is why they are experiencing increased popularity. But the suitability of this type of equity release scheme will depend on your specific requirements and personal situation – along with how much money you need to borrow.
For this reason it’s key to consider your short-term and long-term requirements to try and plan for the future accurately and adequately.
This type of equity release appears to be popular as it occupies a niche in the market, addressing many of the issues previously experienced with traditional schemes.
The rigidity and high costs involved put people off – but these problems could now be a thing of the past thanks to a significant increase in drawdown mortgage providers on the market.
That’s simple. You can read more about how the drawdown equity release calculator works here and use the calculator on the page. Or you can try the calculator below.
This video explains what the advantage and disadvantages of drawdown lifetime mortgages are.
To help our site users you can have a free consultation with an equity release specialist to help you better understand how it works and what your options might be.
To do so you can book an appointment directly using the calendar below. Just pick your preferred time and date and someone will call you to help.
Once you’ve decided that a mortgage is going to be a viable option for you, it’s important to research and choose providers carefully.
Each company will have differing terms – some of which may suit you – but others won’t. Think about your specific requirements and thoroughly consider all the options available based on your individual requirements.
Keep in mind that this has to work for you and should be aligned with your personal objectives and circumstances.
Ask for detailed information from each and take a look at impartial testimonials and reviews online, as these should give you a clearer picture of how easy it is to deal with the provider. It’s also worth chatting to family and friends and asking for help if you need it.
All drawdown lifetime mortgage providers should be able to provide detailed literature and tailored advice depending on your situation – so after finding several online with positive reviews, it’s worth gathering specific information from each before making a final decision.
Considering later life financial options and care provision? Find more dedicated resources and detailed articles on this site.
It is essential that you use a specialist to secure an equity release scheme. They will ensure that your interests are always protected and also ensure that you don’t waste thousands of pounds on a bad deal.
If you do not feel confident in choosing an advisor, you can leave your details below, and we will ask an advisor to contact you.
We do not charge for this service and it is absolutely free or you can call 0800 4640806 and speak to a specialist straight away. They will be able to tell you what the best drawdown equity release deals are.
Or book an appointment using the calendar above.
Alternative options to a drawdown mortgage include the use of Lifetime Mortgages or Home Reversion plans. We recommend that you read up on these too to ensure you are fully aware of the options available to you.
Lifetime mortgages are the most popular type of equity release.
Here is a video explaining how a lifetime mortgage works.
In essence, a home reversion plan involves selling all or part of your property for a sum less than its market value. In return, you’ll receive a tax-free lump sum or regular guaranteed income. Meanwhile, you’ll be able to remain living at home as a tenant, completely rent-free.
An equity release calculator will tell you how much money you could receive as a tax-free lump sum. The amount is usually dependant on your age and the value of your house.
Interest rates vary and can be anywhere between 3% and 7%. You can call us on 0800 953 3792 and get information on the latest deals, as they can change every day.
Yes, the money you receive is tax-free. However, if you are in receipt of means-tested benefits then these can be impacted. You can contact us on 0800 953 3792 and see if you would be impacted.
The money from equity release can be used for a variety of things. Typically it is used to pay for long term care, modify your home to help with later life living or even to treat yourself to a holiday of a lifetime and help your family financially.
The most popular type is called a lifetime mortgage. If you are over 65 then a home reversion plan might be a better option, Get in touch with us and we will be able to tell you what we think would be best for you.
1 - What is an equity release calculator
2 - What sort of interest rates are applied to equity release mortgages?
3 - Is the money from equity release tax-free?
4 - What can you use the money from equity release for?
5 - What are the different types of equity release mortgage?