drawdown mortgages scotland

Drawdown Lifetime Mortgages

A drawdown lifetime mortgage is a variation on the lifetime mortgage. With a lifetime mortgage, you come to an agreement with the lender and then receive the entire value of the agreement in one transaction. Should you decide to withdraw more equity later down the line, in the majority of cases, you have to complete the entire process again, which can be both frustrating and for many clients involves extra stress and hassle that they don’t need.

The variation that the drawdown lifetime mortgage brings to the table is that an overall amount of money is agreed to by the lender. Once the documentation has been signed, the borrower then has the option to take their money in increments (after taking an initial agreed upon lump sum), as and when they choose
( subject to certain terms and conditions)

Drawdown Lifetime Mortgages provide a number of benefits for the borrower, namely increased flexibility, and significantly reduced interest charges. This is because the borrower is only charged interest on the money they have withdrawn, so compared to the standard lifetime mortgage where interest is charged on the full amount of capital from day one of the loan, interest on a draw-down mortgage is significantly cheaper. This arrangement alone could potentially save borrowers many thousands of pounds over the lifetime of the loan.

Drawdown Mortgages – A Simple Explanation Of How They Operate

The good news is that here at Equity Release Scotland, we walk you through any and all procedures ensuring that you have a full and clear understanding of the product you have chosen.

Your property is valued by an independent chartered surveyor, and then dependent on a number of factors, such as your current age and lifestyle choices the lender will agree to lend you a certain amount of money. This money is secured upon your home, and normally there are no monthly repayments to be made by the lender.

The homeowner is allowed to remain in the property for the rest of their life, or until they have to leave it due to medical conditions. Once the property is vacant, it is sold, and the proceeds are used to repay the initial loan plus any interest that has accrued. Any surplus money is then added to the estate left by the owner of the property.

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The Benefits Of Drawdown Mortgages

The opportunity to reduce the cost of the mortgage, as you are only charged interest on the money you withdraw. Although you have the opportunity to withdraw more money at any time, up to the maximum agreed value, you do not get charged any extra for this added flexibility and used properly it can potentially save you many thousands of pounds.

Your personal circumstances can change through no fault of your own, and a drawdown lifetime mortgage, has the added advantage of total flexibility, allowing you to react quickly and easily to changing circumstances.

Although not guaranteed, due to the huge potential reduction in interest charges versus a standard drawdown lifetime mortgage, there is a much higher likelihood that you will be able to leave a larger inheritance to your loved ones.

Speak to our friendly customer service team about how draw-down lifetime mortgages can protect you from falling foul of means tested benefits.

You are free to use the money for anything you wish, whether that be a round the world trip, or paying for your granddaughter’s wedding.

Drawdown Mortgage Considerations

There are some things that you need to consider when taking out a drawdown lifetime mortgage.

In nearly every agreement there will be a compulsory minimum limit on the lump sum you are required to take. Thinking this through logically, the lender has to ensure that some money is borrowed. Otherwise, they would be tying up large sums of capital, without any benefit to their business whatsoever, and furthermore, until some money is lent, no agreement would be in place.

When deciding how much money to draw down initially, bear in mind that subsequent drawdowns may be charged at a higher interest rate.

You retain the right to live in your property for the lifetime of you and your partner, although the loan provider will have first legal charge against your property.

When dealing with property valuations, there is no way of predicting the future value of your property. However, you can lock in a percentage of the property as an inheritance, which provides peace of mind for many borrowers.

You can choose to repay the loan earlier should you choose, but early repayment charges may apply.

This may seem like a lot of information to take in, but with Equity Release Scotland, we sit down with you and explain everything in everyday language. Our aim as a company is to ensure that you receive the best advice possible and that you make an informed decision on the best product for your circumstances.

At Equity Release Scotland, the majority of our business comes from personal recommendations, which we feel is the perfect verification of how we treat our clients. Give our friendly and knowledgeable customer service team a call today on 0131 644 3664 or 0333 360 1958, and we will be only too happy to arrange an informal and relaxed chat with you, to answer any of the questions you may have.

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Equity Release - Benefits

Tax

There may be some tax implications that you need to take into consideration, but these will vary on an individual basis.

Advice

If and when you decide to move forward with your application, our team of advisors will assist you and answer any further questions you might have.

Assistance

Take you time and don’t ever be rushed into making a decision, whatever your requirements Equity Release Scotland will be there to assist you every step of the way.

Frequently Ask Questions

Once the money has been released to you, the choice on what to spend it on is entirely up to you. There are no restrictions whatsoever (provided it is legal!). So whether you want to go on a round the world trip, buy a new car, or simply pay off other debts, the choice is entirely yours.

Absolutely, that is one of the major benefits of this type of scheme, and it in our opinion is one of the more important foundations upon with the agreement is built. There is little point in removing the financial stress, if a few years down the road you are concerned about losing your home. In fact, not only are you entitled to remain in the home for the rest of your life, but so is anyone else mentioned in the agreement.

If everything goes according to plan, then it is entirely feasible for the money to be released to you between three and four weeks. However, always err on the side of caution and plan on the entire process taking up to eight weeks. The length of time is not entirely under our control, and can take even longer if your solicitor is unfamiliar with equity release schemes for instance.

When you sign the contract, you are simply agreeing to another style of mortgage, so the ownership of the property remains with you.

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