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Drawdown Lifetime Mortgages

Find out if a drawdown lifetime mortgage is right for you

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 28, 2022

We get lots of enquiries from people who want to know more about drawdown lifetime mortgages, whether they’d be eligible for one and how much they could potentially borrow against their property.

To give you a clear understanding of drawdown lifetime mortgages, we have gathered all the key information.

A drawdown lifetime mortgage is a big decision and the amount you borrow could affect how much you have left for unexpected costs such as residential care. Therefore, you should consider it carefully and get specialist advice before applying.

What is a drawdown lifetime mortgage?

A drawdown lifetime mortgage is a type of loan that is secured against your home but allows you to maintain ownership and withdraw equity from it as cash, as and when you like (rather than as a single lump sum). Based on your circumstances such as your age and health, the lender will decide on how much money you can release from your home. The overall amount you can release over time is called your ‘cash facility.’ Rather than receive this as a lump sum of money, you receive an initial advance and can then draw on your ‘cash facility’ as and when you need it.

Drawdown lifetime mortgage interest rates

Rather than paying interest on the full amount of money, you only pay a fixed rate of interest on the money you withdraw. Because you make no repayments, you accumulate interest as well as the debt, which can mean that the total amount you end up owing could be significantly more than you originally borrowed.

How to pay a drawdown lifetime mortgage back

When you die or move into long-term care, your property is sold and the money from the sale is used to pay off the loan. If there is any money left over after paying your loan, this is inherited by your beneficiaries.

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Eligibility for drawdown lifetime mortgages

Many drawdown lifetime mortgage lenders would be willing to approve an application providing you pass their eligibility checks which could include questions about:

  • Your health: This can affect the amount you can borrow, though it’s only usually a factor for borrowers who want to borrower especially large amounts
  • Your age: You must be aged 55 and over
  • The property value: It should be worth a minimum of £70,000
  • The type of property you live in: Lenders prefer standard construction properties
  • Where your property is: It must be in the UK

Before making an application for a drawdown lifetime mortgage, you should talk to an expert who can look at your circumstances and point you in the right direction of a lender who is more likely to approve your application as well as give you the best possible deal.

How much could you borrow with a drawdown lifetime mortgage

Every lender is different when it comes to how much they will lend to a homeowner but usually the older you are, the higher loan to value (LTV) ratio they  will give you. Lenders will also consider your health when assessing your application and in some cases, if you are under 55, they will consider approving a drawdown lifetime mortgage.

Drawdown mortgage examples

For any cases where health is a factor to consider, a doctor’s report will be requested to provide evidence of the illness or condition. Most lenders will consider a maximum LTV or 40-50% although some can consider a LTV of up to 55-60% in certain circumstances.

Healthy/Younger Low LTV (40%)
Mild health conditions/Lifestyle issues i.e smoker Medium LTV (50%)
Serious Health Condition/Older Higher LTV (60%)

For drawdown lifetime mortgage examples that are more specific to your circumstances, contact a specialist here.

Can I get a drawdown lifetime mortgage with credit issues?

If you have bad credit, then this could potentially affect your chances of approval for a drawdown lifetime mortgage, however, as there are no repayments, bad credit is usually less of an issue for lenders. That being said, every lender has different criteria so some may want to look at your credit report when assessing your application for a drawdown lifetime mortgage.

For more information on how each of these can affect your drawdown lifetime mortgage application, see our bad credit mortgages section or make an enquiry and the advisors we work with will talk you through everything.

Are there any other alternatives to a drawdown lifetime mortgage?

Yes, there may be other alternatives that work out more cost efficient or better for you and your circumstances. These can include:

Retirement Interest Only Mortgages

Retirement Interest Only (RIO) mortgages require the homeowner to pay back their interest on the loan monthly. Similarly to drawdown lifetime mortgages, the ownership of the property remains with you and the loan itself is paid back from the sale of the home when you pass away or move into full time care.

Equity Release

Equity Release is a type of loan that is secured against your home. The amount you can borrow depends on a number of factors, including how much equity you own in your property. There are two types of Equity Release:

Lifetime mortgage

You borrow money secured against your home but still remain the owner of the property. The loan is paid back from the sale of your home when you die or move into residential care.

Home reversion plan

You raise money by selling all or part of your home while continuing to live in it until you die or move into residential care.

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Why you should speak to an expert drawdown lifetime mortgage broker

OMA offers a 5-star service with access to expert brokers who:

  • Are whole of market
  • Already know the lenders to go to for drawdown lifetime mortgages as they successfully arrange these already.
  • Are OMA Accredited advisors
  • Have passed a LIBF Training course

Speak to an expert about drawdown lifetime mortgage

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here. Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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