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Equity Release Drawdown Explained

Money Savings Advice Equity Release drawdown

If you’re considering equity release, there are a number of options available to you. One of these is equity release drawdown. If you’re not in urgent need of an immediate large lump sum, it could be more beneficial to you and have less of an impact on the value of your estate.

What Is Equity Release Drawdown?

Equity release drawdown plans give you an accessible tax-free sum. You don’t get the money upfront, but you can withdraw from the fun whenever you need to. You only accrue interest on the money you’ve withdrawn.

Continue reading for all the details.

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Choosing Equity Release Drawdown

Equity release drawdown is a form of lifetime mortgage. It works in the same way as other lifetime mortgages in that you’ll be given an amount of money for the equity in your home, which is only repaid when you either go into full-time care or when you pass away. The money you borrowed, and any interest accrued, is then repaid from your estate, usually with the sale of your home.

The key difference is in how you get your money. With a standard lifetime mortgage, you’ll be given a lump sum paid into your bank account, which you can then invest or spend as you see fit.

With equity release drawdown, you instead have a withdrawal limit – almost like a credit facility, except you don’t need to make regular payments, and you can’t repay amounts into it and then borrow the money again later.

Rather, you’ll have an allowance that you can just choose to withdraw from as you need it. So for example, you may be granted a sum of £80,000 for the equity in your home.

You might only decide to withdrawn £20,000 immediately to pay for some upgrades to your property, and then five years later you might want to take £25,000 out to spend on a dream holiday or just to help cover essential living costs.


According to the Equity Release Council 37,000+ people used Equity Release schemes in 2018, releasing over £3.06bn from their properties.

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Equity Release: Keep Interest As Low as Possible

The reason you would choose this rather than taking out the full £80,000 at once is to keep interest as low as possible. You’ll only be charged interest on the amount of money you’ve withdrawn, not the total lump sum available to you.

So if, for example, you only borrowed that original £20,000 from your limit of £80,000 and you never needed to borrow more, then you’d only be building interest on £20,000 and not the full £80k.

And considering how the interest compounds for the duration of your life, your estate will ultimately owe a lot less in repayments, which means more of its value will go to your loved ones.

It may be that equity release drawdown suits you, or you could prefer just to take the total lump sum to pay off debts or other investments. Our further reading on our website takes you through equity release in detail

Quick Equity Release FAQs


Home reversion plans are, in essence, a means of selling a share in your property to an investor, in exchange for payment. There are no repayments, with the investor receiving their share of proceeds when the property is eventually sold.

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The Equity Release Council is the industry body which represents equity release providers, qualified financial advisers, solicitors and intermediaries. Equity release is a growing sector, especially for older homeowners who may have limited access to finance.

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You need to be at least 55 years old to apply for equity release in the UK. If you are planning to make a joint application, this applies to both of you.

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Equity release drawdown works by giving you the value of your loan as a pot that you can make withdrawals from. You’ll only pay interest on the money you decide to withdraw.

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Equity Release enables you to release cash from your property. There are two option, a drawdown lifetime mortgage is allowing you to release the money monthly or a Lifetime mortgage Lump Sum which pays the released cash in one payment to your account.

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How Can Money Savings Advice Help You With Releasing Equity?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.

Multiple writers wrote this article from team Money Savings Advice who aim to produce useful, relevant, and actionable information about financial subjects so our readers can 'make their money work for them.' Our team of writers regularly update, amend, and change all our content in line with changing legislation and new schemes and released products.

Multiple writers wrote this article from team Money Savings Advice who aim to produce useful, relevant, and actionable information about financial subjects so our readers can 'make their money work for them.' Our team of writers regularly update, amend, and change all our content in line with changing legislation and new schemes and released products.

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