Looking at options for making retirement sweet is on everyone’s mind — even if you’re not retirement age yet, chances are pretty good that you’re going to want to take a step back and review your options.
If you’ve already paid off your home or you’re coming to that point, you have a lot more equity trapped in your home than you think. Now, we say trapped because you can always put that equity to good use rather than just letting it sit around. Why should your life be hard at this point, when you’ve already worked so hard to get things done? This is just the way of things — you want to always make sure that you have options for the most comfortable retirement possible. Life is just too short to find that you’re not getting the type of results that you ultimately want.
So, let’s talk about equity release schemes that work. The benefits of a drawdown lifetime mortgage gives you the power to release the equity in your home in a way that will allow you to expand your lifestyle. With this scheme, you get a cash reserve that you can figure out how to draw the money out of the “pot”, so to speak.
You choose a lower beginning amount of funds to be received, which lowers your interest over the lifetime of the mortgage. This allows you to leave a bit of money behind for your children, if you choose to do so. You can always get more money at a later date, which means that you don’t have any worry over how to take care of the little things in life. This means that you have extra to spoil grandchildren while still making sure that you have your home.
Are you receiving a Council Tax benefit or a Pension Credit? The drawdown lifetime mortgage doesn’t necessarily affect your benefit levels. You can structure your drawdowns around your means testing, which means that the chances of you losing benefits are much less. This gives you a nicer retirement without risking your benefits.
Keep your own home? Control your own life? Pay interest only on the amount withdrawn? The answer to all of these questions is simple: YES! You get to hold on to your home and enjoy it.
There are some cautions that you need to be aware of, and we would be remiss if we didn’t bring them to your attention:
The lender has the right to place some conditions on your mortgage contract. For example, they could stipulate that if the economy gets really bad, they can reduce or even eliminate the cash reserve facility that you’re drawing the money from. In addition, if you use up all of the money, you will have to apply again for an advance of more money.
You will still need to keep up the property and make all necessary repairs. Since you’re still going to be living there, you need to keep it looking nice. Finally, the size of your estate will be diminished, which is something that you need to be aware of. Your children will most likely receive a bit of a shock in terms of waiting for their inheritance. What taxes doesn’t eat away, the lifetime mortgage will get a piece of.
Still, we feel comfortable enough to recommend the drawdown lifetime mortgage for retired persons looking to expand their lifestyle in a big way.