Our Drawdown Lifetime Mortgage
Our Drawdown Lifetime Mortgage gives your clients a flexible cash facility against which they can draw down cash advances at any time.
How does it work?
We calculate a maximum loan amount based on your client's age and property value. From this amount, we advance them an initial sum. After this, money can be drawn down on a regular or adhoc basis, subject to the arranged cash facility at the outset.
The interest payable on our Drawdown Lifetime Mortgage is fixed at the time of arranging the mortgage, and is guaranteed not to change regardless of what happens to interest rates in the future. Each additional advance has a separate interest rate calculated at the time it is requested. That interest rate is fixed for the lifetime of the loan, but can be different to the initial advance (and other drawdown sums).
Interest is charged on the initial cash advance and any subsequent advances, and will accumulate on a compound basis. The mortgage plus interest is only repaid once your client dies or moves permanently into care.
You can see our latest loan to value (LTV) rates further down the page.
The key features are summarised below.
| Feature | Drawdown Lifetime Mortgage |
| Minimum age | 60 |
| Minimum property valuation | £70,000 |
| Maximum LTV | 21% to 47% depending on client's age |
| Maximum cash facility | The lower of £600,000 for properties in England (£250,000 in Scotland, Wales and Northern Ireland), the maximum LTV or three times the initial cash advance, subject to an unused facility no greater than £200,000 |
| Maximum initial advance | £600,000 in England, £250,000 in Wales, Scotland and Northern Ireland |
| No negative equity guarantee | Applies when property is sold following death or moving into permanent long-term care |
| Interest rate or charge | Fixed interest rate set at the time of each cash advance. Interest is compounded annually |
| Death or moving into permanent long term care | Repayment of mortgage (with no early repayment charge) |
| Early Repayment Charge (ERC) | No ERCs for joint borrowers, if repaid within three years of the death, or entry into permanent care of one borrower. |
| ERC free partial repayments | Can make partial repayments without incurring ERCs. Able to pay back up to 10% of each advance in each 12 month period following completion. Subject to no more than a total of 6 payments in the relevant 12 month period for each advance. The minimum amount customers can pay in each instalment is £500, and the overall amount owed must not fall below £10,000. If there is more than one advance, the amount of any partial repayment will be allocated between the advances in proportion to the amount owed on each advance. |
Latest Drawdown Lifetime Mortgage rate
Our current interest rate of 5.29% AER applies across all our age bands (the minimum age for our Drawdown Lifetime Mortgage is 60). This rate is valid as of February 2018.
The interest rate that will apply to the further advance requested will be determined by the customer’s new total accumulated loan balance and the relevant loan to value scale. We have three LTV scales – Drawdown, Lump Sum Lite and Lump Sum Plus.
Loan to value
Our age-related maximum loan-to-value factors are valid as of February 2018:
| Age | Maximum LTV % | Age | Maximum LTV % |
| 60 | 21.0% | 73 | 35.5% |
| 61 | 22.0% | 74 | 36.0% |
| 62 | 23.0% | 75 | 37.0% |
| 63 | 24.0% | 76 | 38.0% |
| 64 | 25.0% | 77 | 39.0% |
| 65 | 26.5% | 78 | 40.0% |
| 66 | 28.0% | 79 | 41.0% |
| 67 | 29.0% | 80 | 42.0% |
| 68 | 30.0% | 81 | 43.0% |
| 69 | 31.5% | 82 | 44.0% |
| 70 | 33.0% | 83 | 45.0% |
| 71 | 34.0% | 84 | 46.0% |
| 72 | 35.0% | 85+ | 47.0% |
