Home Drawdown® is the name given to a range of evolutionary products that introduce an investment approach to the traditional, debt-based equity release market.

A financial crisis is affecting millions of people who make up a large, growing and ageing population who are asset rich but income poor. They survive on the state pension and modest savings, but because of medical advances, they are living longer, they are running out of money and the state is struggling to support them.

 

This problem is fixable because many of these people own a valuable, but illiquid asset - their home. The problem could be solved if they could use some or all of the equity in their home just like a drawdown pension, which would allow them to take out some tax-free cash and provide some additional regular monthly income for the remainder of their lives.

 

The current solution, Equity Release, is a mortgage that allows them to take out a loan secured against their home, where interest payments on the loan are often rolled-up, compounding year-on-year. Generally, they can only get access to about 50% of the equity in their home, while the size of the loan increases every year and the insidious effect of compound interest could eventually wipe out most or all of their equity.

 

To solve this problem the team took a completely different approach by helping to design a debt-free investment solution called Home Drawdown® a new product range that is innovative, financially responsible and much better value for homeowners. Home Drawdown® unitises the value of the home, allows customers to draw down some tax-free cash when the plan is implemented and then provides regular income for the remainder of their lives.

 

Home Drawdown® has the potential to double assets under management for financial advisers and profitably bring a whole new category of clients under adviser servicing. According to Savills, the over 50’s in the UK own well over £4 trillion of home equity.

 

In comparison to debt-based equity release, Home Drawdown®:

·       Is better value, more flexible than today’s options and removes compound interest

·       Provides access, not to 50%, but to 100% or more of the value of the property over time

·       Vastly improves the possibility of leaving an inheritance

·       Brings home assets into the mainstream financial planning process

 

The plan is to launch in the UK at the beginning of 2021.