With the significant rise in house prices over the last couple of decades, a drawdown mortgage is now being used in addition to traditional pension savings, to fund retirement income. Drawdown mortgages are used for many different purposes, from helping children get on the property ladder to funding a wedding, but also to top up retirement income for those who maybe haven’t saved enough in their pensions.
A drawdown mortgage allows you to unlock the value in your property as a lump sum or regular income, but without having to make repayments. It can provide a much-needed income boost for those who need extra funds.
The lower age limit to access funds is generally around 55 and there are two main types of mortgage.
Lifetime mortgage – You release a cash lump sum from your property in the form of a mortgage. You don’t make any repayments whilst you’re alive and the loan is paid back on death. Interest is added to the loan whilst you’re alive so the length of time you live will depend on the inheritance legacy.
Home Reversion – You sell part or all or your property to a reversion provider. You can take either an income or lump sum as payments and you’re allowed to continue living in the property until you die. You have to agree to maintain the property whilst you live in it.