Drawdown facilities have become very popular throughout the equity release market and are similar to the traditional Lump Sum plans offered, with some key differences. An initial lump sum is provided by the lender and interest compounds on the lump sum amount, as well as on top of any interest charged. However, an agreed amount of money is set aside to be accessed from the drawdown facility in the future - think of it as a pot of money that you can access as and when required. Interest is only charged on the further borrowing from the drawdown facility once it is accessed and is charged at the lenders prevailing rate at the time, therefore could be higher or lower than the interest charged on the initial release. Having a drawdown facility available to you rather than accessing a larger lump initial lump sum, can help mitigate any negative effects to your state benefits as well as help reduce the erosion of equity against your estate.
There are different variations of products that offer a drawdown facility, however they all offer you the benefit of reducing the roll-up effect of interest by only accessing the cash that you require, rather than being charged interest on the total facility available to you. Drawdown facilities are attractive to those who are cautious and want to leave the maximum amount possible to their beneficiaries after they pass away. Drawdown facilities are also beneficial to those who want to increase their annual income but do not want to purchase an annuity policy.
"Enjoy your retirement with friends"
Provides a tax-free cash lump sum to use as you wish
Flexible access to further funds in the future as and when required
Allows you to consolidate and pay off loans and credit cards, allowing more financial freedom
Voluntary payments can be made in order to reduce the amount owed
Available to those with poor credit histories, with no affordability checks
More flexible than Lump Sum plans
Interest is only charged on the amount(s) borrowed
All lifetime mortgages are now regulated under the Financial Conduct Authority. Because lifetime mortgages are only available to those in their later years, all lifetime mortgages (and home reversion plans) require the applicants to receive financial advice from an equity release specialist, as well as independent legal advice. Because there are multiple equity release lenders each offering different products with access to various features, JNS Financial highly recommends that you get advice from a financial adviser who can offer recommendations from across the whole of the market, rather than restricted advice linked to only one lender. We will only introduce you to equity release specialists who are independent, therefore act in your best interests. For more information, please contact us today.