drawdown mortgages scotland

Lifetime Mortgage-Drawdown OR Reserve

A Lifetime Mortgage with a Drawdown OR Reserve facility is a variation on the standard Lump-Sum lifetime mortgage. Instead of simply taking all the available funds agreed with the lender initially from the outset, the Lifetime Mortgage with a Drawdown or Reserve facility allows you to take a smaller lump sum initially and be able to go back to the same lender over the life of the agreement and request funds from a pre-agreed reserve. The Initial sum taken will be fixed for life typically (unless a variable rate has been agreed) but any subsequent sums drawn down from the reserve in the future will be at the prevailing rate offered by the lender at the time of the drawdown. This could be higher or lower than the initial sum received.

The Lifetime Mortgage with a Drawdown or Reserve facility is perfect for clients who may not need to take a large lump sum initially but would rather spread the pre-agreed sum from the lender over a much longer period. The interest rate charged on a drawdown or Reserve facility only begins to be applied when it is actually used. The Drawdown or Reserve facility is subject to the lenders terms and conditions at all times.

A Lifetime Mortgage with a Drawdown or Reserve facility has the benefit of not having the interest roll-up (assuming the client does not elect to make interest or ad hoc voluntary payments) as fast as its stablemate the ‘Lump-sum’ Lifetime Mortgage purely because not all the money is drawn down immediately from the outset. As with all the products available, your Adviser will make a recommendation after taking into account your personal circumstances, availability and suitability of alternatives and your express goals and objectives.

Lifetime Mortgage with a Drawdown or Reserve facility

At Equity Release Scotland, the client’s circumstances, availability and suitability of alternatives and the client’s monetary objectives will always help to dictate what scheme is recommended by your adviser. All discussions, advice and recommendations made will be documented and shared with the client during the application process in the form of a suitability letter to ensure they are fully informed of what product has been recommended and, importantly, why.

As with all Equity Release products the sum available is based upon the age of the youngest applicant, the value of the property and in some cases the health of the youngest applicant. Your property is valued by an independent chartered surveyor, to confirm the value. From these factors the lender is able to make a monetary offer to the client.

As with all products from lenders approved by the Equity Release Council, you will benefit from and enjoy the following guarantees:

  1. You have the right to remain in your home for as long as you choose.
  2. You have the freedom to move to another property without Penalty (in keeping with the lenders criteria)
  3. You will never owe more than the value of your home due to the ‘No Negative Equity Guarantee’.
Request a Call Back

The Benefits Of Drawdown Mortgages

Lifetime Mortgages with Drawdown or Reserve Facility work in the same way as Lump-sum Lifetime Mortgages but with added flexibility.

Other Features and Benefits are:

  • You can choose to drawdown cash in stages after taking an initial release amount.
  • Interest is only added to the sums you actually draw-down, and can be higher or lower than your initial release.
  • Interest adds up much more slowly than if you took the full available amount initially.
  • You still qualify for the downsizing option with many lenders
  • You still qualify to make interest payments with many lenders
  • You still qualify to make Voluntary Partial Repayments with many lenders.
  • You can still ring-fence a portion of the property to protect the inheritance to family with many lenders.
  • Some lenders still offer enhanced terms due to health and lifestyle which could mean more money, a lower rate or both.

If your personal circumstances change at short notice a Lifetime Mortgage with a drawdown or Reserve facility due to it’s flexibility, allows you to react quickly and effortlessly to changing circumstances.

Because interest accrues more slowly in general in a Lifetime Mortgage with a Drawdown or Reserve facility there is a greater likelihood (but not guaranteed) that some inheritance may be passed on at the end of the agreement.

Lifetime Mortgages with a Reserve or Drawdown facility can affect any entitlement to means tested benefits and can reduce the value of your estate overall. Your adviser will go over this in detail with you .

The monies raised from a Lifetime Mortgage with a Drawdown or Reserve facility can be used for any purpose whatsoever. Provided it conforms with the law of the land.

Drawdown Mortgage Considerations

When taking out a Lifetime Mortgage with a Drawdown or Reserve facility there are some considerations that should be made:

In most provider agreements there will be a minimum lump sum you are required to take as an initial release together with the drawdown or reserve facility. This ensures the lender actually has an agreement in place and will have some return for costs involved in setting the agreement up in the first place.

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

With Equity Release Scotland, will explain everything in great detail in a succinct and easy to understand format. Our overriding objective is to ensure that you will receive the best advice tailored specifically to your unique circumstances taking into account your goals and objectives and that, ultimately, you and your family (if applicable) can make an informed decision.

At Equity Release Scotland, much of our business comes from personal recommendations and referrals, which is very satisfying as there is no greater compliment which can be made to the standard of our services. Give our friendly and knowledgeable customer services 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.

Speak to one of our Local Equity Release Experts Today

Request a Call Back

Equity Release - Benefits

Tax

The sums raised from an Equity Release Plan on your primary residence is tax-free. However, should the proceeds from your Equity Release be invested in a business or investments which attract positive financial returns or interest, these may be subject to taxation. Please consult a specialist tax adviser in these circumstances.

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.

Yes. Those party to the Equity Release agreement can live in the property for as long as they wish. Any other individual(s) not party to the agreement may have to take separate legal advice and may have to sign an occupancy waiver.

On average a case should complete in 6-8 weeks. This is always subject to title issues and operational demands placed on the lender and their legal agents.

Those mentioned in the agreement will at all times own the property.

Request a Call Back

To get more advice and information, please fill out the form and we will be call you back.

Click to Call