![]() If Jane took £70,000 now at 4% interest, the amount owed would grow to £85,166 after five years (£15,166 in interest).īy taking £20,000 now, the amount owed after five years is only £24,333 (£4,333 in interest). However, she isn't stuck paying interest on the money needed in the future while it sits in her bank account not ready to be spent. Jane benefits from a 4% rate of interest on the money she needs now. I recommended a lifetime mortgage providing an initial lump sum of £20,000, with a reserve facility of £50,000 for use later. Initially, Jane thought about taking out £70,000 to cover these expenses, but I recommended otherwise. ![]() Jane would like to stay in her property later in life but thinks that she would like a new bathroom and kitchen in five years. Jane knows that she needs £20,000 now to repay her existing interest-only mortgage. Let's look at an example of a draw-down equity release plan: It will not be surprising that on this basis, nearly half of the plans that I recommend come with a reserve facility. With most lifetime mortgages, the minimum amount you can draw upon in the future is £2,000 at a time.Īs you can see, lifetime mortgages with reserve facilities can be a great way to provide you with future income top-ups as and when you need it. The minimum amount that you must take up-front is usually £10,000, and the amount that you can have in reserve is often up to the maximum available to you. With a draw-down equity release plan, you release an initial amount of money now, and then have access to further money in the future. How do draw-down equity release plans work? What happens when you want more funds and don't have any reserve facility remaining?.How do you access money held in a reserve facility?.How much money can you have in reserve?.Do draw-down plans cost more money than lump sum plans?.Which lenders offer draw-down lifetime mortgages?.How do draw-down equity release plans work?.Importantly you will not be charged interest on the money held in reserve. The future funds are held in a pre-agreed reserve facility which you can draw upon as you need it. Draw-down equity release plans provide you with upfront cash and provide you with ongoing funds in the future too.
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