I have heard about drawdown equity release schemes, what are they?
Drawdown equity release schemes are a type of roll up lifetime mortgage, where instead of you receiving at the outset the maximum amount available (based on your age and property value), only to possibly put any excess money (over what you need for your immediate needs) into the bank, the plan provider grants you a total facility but you only take initially what you require (normally at least a minimum of £10,000), but can then request further draws on the facility until you have used it all up.
Providing you do not need the very maximum amount of money immediately, not only does this give the reassurance that more money is available when you need it, but more importantly you stop wasting, unecessarily the equity in your home, because interest is only charged and accumulated by the lender based on what you have actually withdrawn, not on the amount of your facility. Only when you borrow more, will further interest be compounded.
Whilst specific details of how frequently you can withdraw money and the process involved will vary slightly between providers, generally you can withdraw further money from as little as £2,000 at a time and usually with no additional establishment fees. There is nomally no minimum time interval between taking your original loan and applying to withdraw more money and if required you can normally withdraw as frequently as once a month although you shouldn't think of this as an income plan as you can only continue to withdraw money whilst you have any unused facility to draw.
The interest rate applied on any new borrowing will not normally be the same as on the original draw and can be higher or lower, determined by interest rates prevailing at the time you reqquest it, but will once again be offered at a fixed rate for life. It will not however affect the interest rate already applied to your existing loan. You will therefore end up with a series of different interest rates.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
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If this is just what you could do with, why not find out how large a facility you establish immediately by using our free equity release calculator or call us on 0800 970 4883 or complete our enquiry form to arrange a free no obligation home consultation to discuss it more.