A Drawdown Equity Release Calculator helps homeowners estimate how much money they can withdraw from their property’s value over time while minimizing interest accumulation. Unlike a lump sum equity release, a drawdown plan allows borrowers to withdraw smaller amounts as needed, reducing the overall interest accrued. This calculator is beneficial for retirees looking to supplement their income while maintaining financial flexibility.
Formula of Drawdown Equity Release Calculator
The final debt owed after releasing equity is calculate as:
Final Debt = Initial Release Amount × (1 + Interest Rate)^Term
Where:
- Final Debt is the total amount owe at the end of the term
- Initial Release Amount is the equity withdraw from the property
- Interest Rate is the annual compound interest rate (expressed as a decimal)
- Term is the duration in years until repayment
General Reference Table
| Initial Release Amount (£) | Interest Rate (%) | Term (Years) | Estimated Final Debt (£) |
|---|---|---|---|
| 10,000 | 5.0 | 10 | 16,288 |
| 20,000 | 4.5 | 15 | 38,443 |
| 30,000 | 6.0 | 20 | 96,717 |
| 50,000 | 5.5 | 25 | 188,637 |
| 100,000 | 4.0 | 30 | 324,340 |
Example of Drawdown Equity Release Calculator
Suppose a homeowner withdraws £20,000 at an annual compound interest rate of 4.5% over 15 years.
Using the formula:
Final Debt = 20,000 × (1 + 0.045)^15
Final Debt = 20,000 × (1.931) = £38,620
After 15 years, the homeowner will owe approximately £38,620, including accrued interest.
Most Common FAQs
A drawdown equity release allows homeowners to withdraw money in smaller increments, reducing the overall interest accumulated compare to a lump sum release, where all the money is took at once.
Yes, some plans allow early repayment, though early repayment charges may apply. It’s best to check with your provider for specific terms.
Interest is typically compound annually on the amount withdrawn. Since funds are access gradually, interest accrues only on the amount taken, reducing the total debt compared to a lump sum release.