A New Way to Retire: Drawdown Equity Release
Drawdown equity release is a new way to retire. It allows homeowners, who have built up equity in their homes, to borrow against the value of their home. This type of mortgage can be used for any purpose- whether it’s to fund pension gaps or buy an investment property.
It might seem like a risky way to save money but there are safeguards in place which make this very safe and secure- plus interest rates are low at the moment so borrowing now could help pay off more expensive loans later on. Remember, if house prices do go down then you have less money tied up as well!
How does it work?
You need £500 worth of spare capital (cash) in your home and if you have a mortgage on the property then you can take out an equity release loan. You would need to repay this in full at some point in the future, usually when either selling or remortgaging (due to changes in legislation).
If using it as part of retirement planning- how much is released depends on what age you are when taking out the Equity Release Plan – with 60% being available for homeowners aged 55+ (£200k) but only 30% available from those aged 65+, even though they own more capital (£300k).
Why haven’t I heard about this before?
There’s been talk about these loans since 2008, but there has not been enough research done into them yet so they have been slow to catch on. However, as with every other type of loan in history- there’s never been a better time to borrow!
Finally, because equity release is a type of mortgage- we would recommend discussing the plan with your family and loved ones.