Drawdown Plans


A drawdown plan is simply a Lifetime Mortgage with increased flexibility therefore having very similar advantages and disadvantages.

The main difference between a basic Lifetime Mortgage and a Drawdown Plan is that with Home Drawdown Plans you don't receive the full sum of money available to you straight away. Instead, you decide on the maximum amount of equity you want to release, and 'draw down' the cash in stages as and when you want to.

Advantages of a Drawdown Plan

  • Available to home owners aged 55 or above
  • Money released is tax free and can be spent on anything you choose
  • No repayments to be made during your lifetime
  • You retain full ownership of your home so you benefit from any rises in the property market
  • You are guaranteed occupancy for life
  • 'No negative equity' guarantee under SHIP means you will never pass on any debt as part of your estate under this scheme
  • The loan will be a debt against your estate and will therefore reduce your overall inheritance tax liability
  • You can draw down cash by taking withdrawals from the total amount available as and when you need them, or possibly request a monthly income
  • You only pay interest on the amount of equity released, not on the full amount available therefore interest will accumulate more slowly than with a regular lifetime mortgage possibly making the total amount repayable less.

Disadvantages of a Drawdown Plan

  • The amount you leave as inheritance will decrease
  • You cannot usually raise as much with a lifetime mortgage as you could with a reversion plan
  • You could be required to pay an Early Repayment charge if you wish to pay off the plan early
  • Eligibility of means tested benefits could be affected

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