What Is Drawdown Equity Release and Is It Right for You?
(2025)
*Published 3rd November 2025*
Equity release lets homeowners aged 55 and over unlock money from their property without moving out. A popular option is drawdown equity release, which gives you the flexibility to release money gradually rather than in one lump sum.
In this article, we’ll explain how drawdown equity release works, how it compares with lump sum plans, the pros and cons to weigh up before choosing a plan, and what the latest figures from the Equity Release Council tell us about trends in 2025.
How Drawdown Equity Release Works
With a drawdown plan (also called a drawdown lifetime mortgage), you:
- Agree on a total amount you could release (the facility).
- Take an initial lump sum (often with a £10,000 minimum).
- Leave the rest in reserve until you need it.
Rates correct at 7th October 2025. 6.5% MER deal through Age Partnership when you use our equity release calculator.
The key point is that interest only builds on the money you actually take, not on the total pot available (the ‘facility’). This makes drawdown more flexible and potentially cheaper in the long run in terms of the cost of repaying a loan and the interest on it than a standard lump sum equity release where you pay interest on the total amount.
Lump Sum vs Drawdown – What’s the Difference?
| Feature |
Lump Sum Lifetime Mortgage
|
Drawdown Lifetime Mortgage
|
|
How do you get the money
|
One large payment upfront. |
Initial lump plus smaller amounts taken over time. |
| Interest charges |
Interest starts on the full amount immediately.
|
Interest only builds on what you take, not on the reserve.
|
| Best for |
Big, one-off expenses like clearing a mortgage or major home improvements. |
Topping up income or covering ongoing and unexpected costs. |
|
Control over borrowing
|
Less flexible – you borrow everything in one go. |
More flexible – you borrow as and when you need. |
| Impact on inheritance |
Potentially larger, as interest builds on the whole sum from day one. |
Often smaller, as you control borrowing and therefore reduce the amount of interest that builds up.
|
Example Scenarios (Illustrative Only)
Susan, age 68, releases £50,000 from her £250,000 home with a lump sum plan at 6.4% (MER).
With no repayments, after 15 years, she could owe around £128,000.
If she had taken £20,000 upfront and kept £30,000 in reserve via a drawdown plan, she would only pay interest on the £20,000 until she drew more. This could significantly reduce the total amount that has to be repaid.
These examples show why many people choose drawdown plans. They give more control and may reduce repayment costs over time.
Pros and Cons of Drawdown Equity Release
- ✅ Lower interest costs – you only pay interest on the money you actually release.
- ✅ Flexibility – dip into your reserve when you need to, rather than borrowing everything at once.
- ✅ Peace of mind – you know more cash is available if circumstances change.
- ❌ Rates may be slightly higher – drawdown plans can carry a small premium compared to lump sum plans.
- ❌ Reserve not guaranteed forever – if the lender withdraws the product, your facility could be affected.
- ❌ Still reduces inheritance – even with drawdown, interest compounds over time, leaving less for beneficiaries.
Trends in 2025
According to the Equity Release Council’s Q2 2025 lending report:
- Drawdown continues to be a popular choice, accounting for around two-thirds of new plans.
- Customers value flexibility, particularly in uncertain economic times.
- Average amounts released are slightly smaller than with lump sum plans, reflecting the more gradual use of funds.
Is Drawdown Equity Release Right for You?
Drawdown equity release could suit you if you want access to cash over time and prefer to limit how much interest builds up. It may not be the best choice if you need a large lump sum upfront for major expenses.
As with any financial decision, it’s vital to:
- Consider alternatives first, such as downsizing or family support.
- Get free guidance from Pension Wise via MoneyHelper.
- Seek regulated advice from a broker such as Age Partnership, who can compare plans from across the market, including Aviva, SunLife, and others, to find the best fit for your circumstances.
Final Word
Drawdown equity release gives you control, flexibility, and potential savings compared with taking a lump sum upfront. But it’s still a major commitment that ultimately reduces the value of your estate. The right choice depends on your needs, goals, and family circumstances.
Speaking with a regulated adviser will help you understand the options and decide whether a drawdown is right for you.
✅ Source note: All facts checked against the Equity Release Council Q2 2025 report and Aviva / SunLife product guides.
Next steps
Compare equity release providers or try our free, no-obligation equity release calculator to see how much cash you could unlock from your home.
For free, expert advice call 0800 133 7380 to speak to an adviser at Age Partnership, the award-winning retirement specialists, who can talk you through Pure Retirement lifetime mortgages as well as many other leading providers.
Be sure to seek professional financial advice and speak to your family before deciding whether equity release is the right option for you. It’s important to understand the implications of a lifetime mortgage and consider the alternatives to equity release first.
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