My client is an owner occupier on GPC. She is considering a "drawdown" equity release scheme, i.e. one where the scheme is set up to a maximum amount of capital which she can draw down on demand. She wants to use the capital do some reasonably large improvements to the house, kitchen, windows etc. Previous threads on the subject seemed to reach the conclusion that such irregular sums are treated as capital which seems to me to the correct approach but what I was wondering is there are risk that the whole capital amount available could be treated as notional capital if not drawn down? This ignors the effect of any AIP of course. Also, is there any risk on deprivation in these circumstances?

Any thoughts and help appreciated!

Mon 08-May-06 10:17 AM by ken

I can only say we've not yet come across Pension Service arguing that deprivation of capital applies in a 'drawdown on demand' equity release scheme.
Given that the value of the home you live in is ignored as capital, and there is a cost involved in taking the capital it would seems to be an unreasonable interpretation of the rule.

just for information Age Concern factsheet on equity release here
http://www.ageconcern.org.uk/AgeConcern/Documents/IS7EquityreleaseOct04.pdf
and Information sheet on raising capital from your home here
http://www.ageconcern.org.uk/AgeConcern/Documents/FS12_0605.pdf

alban

If it is an equity release scheme of the lifetime mortgage type, then it is a loan and there is no question of deprivation.

If it is a reversion scheme , where part of the home is sold, then it might be if the contract is set up for the whole amount but only a part is drawn down.