Lifetime Mortgage Drawdown

Q: Are there any restrictions on the type of property?

Yes, some lifetime mortgage providers may not lend on certain properties. As your property is the security for the loan, the lender needs to be satisfied that the property won't lose attractiveness to future buyers. Properties including farms, houseboats, static homes, retirement properties, guest houses, and basement flats may not be acceptable to your chosen lender. This could be due to building material, type of property or likelihood to sell.

Q: What fees are involved with a lifetime mortgage?

As with any mortgage, there are some fees involved. These depend on the provider you choose, as well as any solicitors fees. The fees you are charged for will vary, but will likely include fees that cover: Advice, Solicitors, Arrangement, Valuation, Interest rates, Early repayment, Discharge

Q: What is a no-negative equity guarantee?

Equity release providers who are on the Equity Release Council have agreed to a set of standards, which include a no-negative equity guarantee. This simply means that you'll never have to pay back more than the market value of your home if it is lower than the total amount owed.

Designed to let you borrow a little now, and more in the future

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What is Lifetime Mortgage Drawdown?

With a Lifetime Mortgage Drawdown, you can access your money with more flexibility. Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these products can often prove to be a cost-effective method of releasing equity.

A lifetime mortgage drawdown is a loan secured against your property that lets you access the money tied up in your home over time. Unlike a lump sum lifetime mortgage, where you receive a single lump sum, the drawdown option allows you to take the money over time. As this is a lifetime mortgage, you don’t make regular monthly payments, instead, the interest is rolled up and paid off at the end of the loan.

This is a lifetime mortgage. To understand the features and risks ask for a personalised illustration.

Please note that the information given on these pages should not be seen as advice to take out this product.

Make an enquiry

To find out if you’re eligible and how much equity you could release from your home, call one of our specialist advisers today.

0800 756 8059

Lines open: 9am to 5pm Monday to Friday

TextDirect: First dial 18001

We may record and / or monitor calls for training and audit purposes

IS A LIFETIME MORTGAGE DRAWDOWN RIGHT FOR YOU?

It's a big decision to make, so it's important you make the right choices when thinking about releasing money from your property.

The cash you release is tax-free and can be spent in a variety of ways.
Access your money with flexibility, you can release equity over time, as and when it suits you.
It’s cost-effective because you only pay interest on the cash you choose to take out.
You continue to own your home, thereby benefiting from any future increase in its value.
There is no requirement to make monthly repayments with a lifetime mortgage drawdown. There are plans that may allow you to make voluntary interest payments subject to certain limits. Early repayment charges may apply above a set value.
All products come with a ‘no-negative-equity guarantee’, meaning that your estate won’t owe more than your property is worth when it is sold.
Some equity release products will offer an inheritance protection guarantee which can allow you to protect a percentage of your property value so that your loved ones could be guaranteed an inheritance.
The interest rate that applies is determined at the time it is taken and is secured for life, meaning it won't be affected by future interest rate increases.

The size of the lifetime mortgage will grow quickly over time. This is because interest is added to the original loan amount and it continues to roll up as future interest is added on top of this (known as compound interest).
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 would not be guaranteed and may be time limited. You would need to seek product T&Cs for more details.
The amount that you will leave as an inheritance will be reduced each time you release money.
If you wish to pay off the equity release product early, you may have to pay an early repayment charge, these differ from product to product.
In some cases, the lump sum of money that you release could affect your entitlement to any means-tested benefits that you may receive now or in the future.
Equity release requires paying off any existing mortgage.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and may reduce the value of your estate and impact funding long-term care. To understand the features and risks ask for a personalised illustration. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.

Please note, at LV= we don’t offer a home reversion plan option.

Explaining compound interest

Compound interest is when interest is applied not just on the original amount you borrowed, but also on the interest that's already been added. This can cause the outstanding balance to grow rapidly over time.

Compound interest is applied to all lifetime mortgage products and affects the total amount you pay.

Higher interest rates can lead to faster growth in the total amount owed.
Withdrawing multiple draw downs can reduce the overall amount available for your needs.
It's essential to carefully consider your options and seek professional advice before making a decision.

Try our free equity release calculator

Our equity release calculator allows you to quickly find out how much tax-free cash you could unlock from your home.

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drawdown lifetime mortgages

How does a drawdown lifetime mortgage work?

A drawdown lifetime mortgage allows you to agree a cash facility from your home's equity that you can access in a series of smaller payments. You still retain ownership and the ability to live in your property.

Here's a brief overview of how it works:

You choose how much money you want up front as an initial loan.
You then set up a cash facility to draw down from, which is typically between 10% to 25% of your property's value.
The remaining money is available from the cash facility, which you then request from in future.
Access to the cash facility is not guaranteed and is subject to product terms and conditions.
You'll only pay interest on the amount borrowed, not the total cash facility.
You can make repayments without penalty, subject to product terms and conditions.
When you pass away or move into long-term care, the outstanding balance is typically repaid from the sale of your property.

Equity release advice

Why choose LV= for Equity Release Drawdown Advice?

The equity release products we advise on are protected under the Equity Release Council and their No Negative Equity Guarantee. This means you won’t owe more than the value of your home when you pass or move into long-term care.
Our advice is focused on giving you honest advice and finding you a suitable equity release plan from the whole of the market, not just from a few select providers.
We’re a mutual, so every single decision we make is made in the best interest of our customers, whether that’s for life insurance or equity release.

What is a drawdown reserve?

Unlike a lump sum lifetime mortgage, a drawdown lifetime mortgage means a cash reserve is set up from the outset for you to draw down from when needed.

When you apply for a lifetime mortgage drawdown, the lender will first determine your cash reserve facility based on the age of the youngest homeowner in your property, as well as the property's value. In some cases, the lender may also consider the applicant's health. This amount is calculated using the provider's loan-to-value percentages, which increase as you age. As a result, older homeowners are more likely to be offered a larger cash facility.

Once you know the available drawdown facility, you can choose how much tax-free money you want to withdraw up front. Any remaining funds will be available from the reserve facility. If you need additional funds in the future, you can submit a drawdown request, which can often be processed in smaller amounts, often with a minimum requirement.

Note that access to the cash facility is not guaranteed and product terms and conditions apply.

Means-tested benefits and drawdown lifetime mortgages

Some people choose a drawdown lifetime mortgage option to help manage their means-tested benefits. Here’s what you need to know.

When considering a drawdown lifetime mortgage, one key advantage is that it may have a lower impact on means-tested benefits as your available savings and income aren’t as elevated.

You could carefully manage the initial drawdown amount in conjunction with existing bank balances.
By staying within the DWP's guidelines, you may potentially preserve your eligibility for means-tested benefits.

This is not financial advice, and eligibility for means-tested benefits is affected by equity release. Seek financial advice to understand how it will impact your personal circumstances.

more about lifetime mortgages

We know your home is important to you, that’s why lifetime mortgages are clear and straightforward

What is a lifetime mortgage lump sum

Lifetime Mortgage Lump Sum

If you need to release equity for a specific one-off expense such as home improvements or to pay university fees, it may be better to borrow a one-off lump sum. Find out more about this alternative product:

Lifetime Mortgage Lump Sum

FAQs on Lifetime Mortgage Drawdowns