Drawdown mortgage 'can ease burden'

Equity release schemes can be very useful to homeowners looking to boost disposable income and compensate for the financial burden of buying a house.

While many people in expensive property areas like London choose to rent rather than buy, financial services firm Intune group claimed that a drawdown mortgage and its equity release options could come in useful for stretched buyers.

A drawdown mortgage allows a home purchaser to decide on the maximum amount of equity required for release, with drawdown of the cash available in stages.

Mark Gettinby, director of financial services at Intune group, said: "The most common reasons [for equity release] are to supplement income, to fund one off purchases such as home improvements or to repay other debts."

He added that a Drawdown Lifetime Mortgage, allowing clients to take a lump sum of cash upfront "gives clients the peace of mind of knowing that they have funds available to them as and when they need them".

Mr Gettinby cautioned, however, that with no repayments to make, substantial interest could accrue on equity release loans – adding to the financial uncertainty that leads many property-seekers to avoid mortgage deals altogether and opt for rental property.

Published 8th January, 2008

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