9/2/2023 0 Comments Drawdown meaning in bankingYou can apply for a drawdown in 5 simple steps The simplest way to request a drawdown is online. If you apply online for a drawdown, we’ll send the Offer of Loan to you through DocuSign (our secure email portal). If you have less than £1,000 remaining in your Drawdown Facility you will need to call us on 03330 048444. The minimum amount you can drawdown online is £1,000.Your Drawdown Facility will reduce by the amount you drawdown so there will be less available for your future needs.As you'll pay compound interest from the day we pay the money to you. You should only release what you need at the time from your Drawdown Facility.We’ll confirm the interest rate in the Offer of Loan we send you for the drawdown. The rate will depend on the interest rates available for your lifetime mortgage, on the date you apply for the drawdown. A different interest rate may apply to each drawdown amount you take and may be higher or lower than the interest rate on your initial loan.When you’re taking more money from your Drawdown Facility there’s a few things to consider, and you may want to go back to your financial adviser for guidance. Remember, the higher the interest rate, the greater the affect of roll up interest over time. Your lifetime mortgage is designed to run for the rest of your lifetime which could be longer or shorter than this example meaning you could owe more or less. Remember, these are only examples and show what would happen over 20 years. They’re based on a property value of £500,000 a loan of £100,000 and assume that house prices will not grow over the 20 years. The illustrations below show how different interest rates might affect you if you borrowed over 20 years. This is also known as ‘roll up interest’ or ‘compound interest’. This means that interest is charged on your loan amount plus any interest already added. If you didn’t choose to pay Monthly Interest Payments on your lifetime mortgage or have stopped making Monthly Interest Payments, the interest will be added to your lifetime mortgage each month and ‘rolled up’. However, the amount you owe can increase quickly over time and the higher the interest rate on your loan, the faster this will happen. The interest rate on your initial loan is fixed for life meaning it won’t change even if rates fall in the future.
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