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What is a drawdown lifetime mortgage?

A drawdown lifetime mortgage is a type of equity release plan that lets you take cash from your home as and when you like – rather than in a single lump sum. But could a drawdown lifetime mortgage be the best option for you?

How a drawdown lifetime mortgage works

Like other types of equity release plan, a drawdown lifetime mortgage is a way to release cash from your home without having to downsize. You’ll also need to meet many of the same requirements, like being aged 55 or over, a homeowner and a UK resident.

But unlike some other plans, a drawdown lifetime mortgage gives you the freedom to release money as and when you need it. Here’s a quick rundown of how it all works.

    • Your provider agrees to an overall sum of money you can borrow, based on your age, state of health and property value
    • You take an initial lump sum and the rest is kept in a cash reserve facility, ready for you to ‘draw down’
    • Then, you can release smaller amounts as and when you need them (minimum amounts apply, but there’s no new set-up fees)
    • Interest is added to the money you’ve drawn down – rather than on the whole amount you borrow for the duration of the plan
    • There are no monthly repayments to worry about – the full loan and interest are repaid when your home is sold (which is usually when you pass away or move into permanent care)

What is equity release?

Drawdown lifetime mortgage vs. lump sum lifetime mortgage

A drawdown lifetime mortgage is a variation of a lump sum lifetime mortgage (like a roll-up lifetime mortgage). Here are the main differences:

      • More flexibility and freedom – you can release cash from your reserve as and when you need it, and leave some for the future
      • Less interest to pay – interest is only added to the amount you draw down, and no interest accumulates while your funds are still in the reserve
      • Reduced impact on inheritance – less to pay in interest means there could be more money left for your family
      • Reduced impact on means-tested benefits – you’re in control of your finances, so you can organise things in a way that won’t affect your means-tested welfare payments and benefits

How does equity release work?

mature couple holding hands and walking in a scenic area

Is a drawdown lifetime mortgage right for you?

Borrowing money can prove difficult in later life, especially if you’re retired. This is because lenders usually look at whether or not you have enough income to pay back your loan, as well as your age. This simply isn’t the case with equity release.

If you’re aged 55 or over, you could be eligible for a drawdown equity release scheme (or another type of equity release) with no affordability checks. So, if you want access to regular or occasional small amounts of cash to boost your income, it could be the right option for you.

Remember, the money is yours to spend as you wish – whether you’d like to make life more comfortable, treat yourself to the holiday of a lifetime, or lend your family a helping hand. Just bear in mind that, if you still have a standard residential mortgage on your property, the money from your drawdown lifetime mortgage will go to pay this off first.

An independent expert adviser will be able to help you decide whether or not equity release is right for you, and which plan is best suited to you. To make sure you understand the features and risks of a lifetime mortgage ask for a personalised illustration.

Could equity release be right for me?

Advantages of a drawdown lifetime mortgage

      • Interest doesn’t mount up as quickly – because you only pay interest on the amount of cash you release, rather than the total sum in your reserve
      • Flexible access to tax-free cash – you can take it as and when it suits you, and it’s yours to spend as you wish
      • Maintain home ownership –so you can benefit from any future increase in value
      • Manage means-tested benefits – you can help avoid affecting state benefits by taking smaller amounts
      • No monthly repayment – the loan and interest are repaid when your home is sold, either when you pass away or move into long-term care
      • No negative equity guarantee – this protection means you can never leave your family in debt
      • Moving house is still possible – just as long as the home you’re moving to meets the criteria of your lender

Disadvantages of a drawdown lifetime mortgage

      • Equity release can reduce what you leave as an inheritance – which means you will leave less money for your loved ones
      • Interest rates can be slightly higher – when compared to some other types of lifetime mortgage
      • Different interest rates can apply to new withdrawals – depending on the prevailing interest rates at the time and they may be greater than your initial rates
      • There can be limits – to the number of times money can be released in one year
      • Means-tested benefits could still be affected – so make sure you get trusted financial advice before you make a decision
      • Early-repayment charges can be hefty – if you want to pay off the loan early
      • Further amounts aren’t guaranteed – if you want to increase the total amount of equity you have agreed to drawdown over a specific period, you’ll have to apply for a further advance
three doors painted in different colours

Other types of lifetime mortgage

For some, a drawdown lifetime mortgage can be a practical way to boost your income in later life. But if this particular option isn’t right for you, there are other types of equity release plan to consider, including:

Roll-up lifetime mortgage

Get a cash lump sum with no monthly payments. The loan and any interest is paid by the sale of your home when you pass away or move into care.

Interest-only lifetime mortgage

You access a cash lump sum from your home and pay off a certain amount of interest monthly, which will reduce the amount of interest you need to pay back.

Flexible lifetime mortgage

You can choose to make voluntary payments to bring down your mortgage loan amount.

Enhanced lifetime mortgage

Only for those with medical conditions, these let you unlock more cash from your home, and may qualify for better rates.

Home reversion

Unlock tax-free cash from your home by selling some or all of your property to your equity release provider, and you continue to live there rent-free for the rest of your life.

wooden house next to a notepad and calculator

How much equity can you release?

As a rough idea, it’s possible to release between 20% and 50% of the equity (or value) in your home. But the exact amount varies from person to person, depending on your circumstances.

When deciding how much equity you can release, your equity release provider will look at two main things:

      • How much your property is worth – they’ll send a surveyor over to give you a professional valuation
      • How long you’re likely to live after taking out your plan – this is based on your age (and that of your spouse if it’s a joint application) and your health

It only takes a few seconds to see how much tax-free cash you could unlock with our free online equity release calculator.

How much has your house made you?

If you’ve lived in your home for a number of years, chances are it’s increased in value. Equity release is a way to get hold of that extra cash tied up in your home, without having to downsize.

Find out how much your home’s gone up in value – and how much money you could access – with our how much has my house made me? tool. Just enter your postcode and you’ll be ready to go.

mature couple smiling together and looking out of the window

Get the right advice

Equity release is a big financial decision, so you wouldn’t trust it to a company you’ve never heard of. With SunLife, you don’t need to worry – we’ve been around for over 200 years, and we’ve always focused on helping people over 50 so you can rest assured that you’re in safe hands. Feel free to take a look at our equity release guide to find out more.

If you think a drawdown lifetime mortgage (or another type of equity release plan) could be right for you, don’t hesitate to call The SunLife Over 55 Equity Release Service. We’re here to put you in touch with the independent expert advisers, so you can get the advice you need before you make any final decisions.

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services. Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.