The difference
A lump sum plan pays the whole amount on completion and charges interest on all of it from day one. A drawdown plan agrees a total facility, pays an initial amount (usually at least £10,000) and lets you take further amounts, typically £1,000 to £2,000 minimum, whenever you like, without new advice or fees. Interest is charged only on money you have actually drawn, from the day you draw it.
A worked example
You are 68, the home is worth £300,000, and over the next ten years you expect to want £70,000: £30,000 now for the roof and the mortgage, £20,000 in five years for a car and a big holiday, £20,000 in ten years for whatever comes. Rate 6.2%.
| Lump sum £70,000 now | Drawdown £30k / £20k / £20k | |
|---|---|---|
| Owed after 10 years | £127,700 | £101,800 |
| Owed after 15 years | £172,600 | £137,500 |
| Owed after 20 years | £233,100 | £185,700 |
Same £70,000 of spending; £47,000 less owed after twenty years. And if the third £20,000 turns out not to be needed, it is never borrowed at all.
Other advantages of drawdown
- Benefits. Undrawn money is not capital, so it does not count against Pension Credit or care thresholds.
- Interest rates. Each drawdown is at the lender's rate at the time, which could be lower or higher than today. (Some see this as a disadvantage.)
- Discipline. A large sum in the current account tends to get spent; a facility does not.
When a lump sum is right
- You need all of it now: clearing a large mortgage, buying something, a gift with a deadline.
- You want the certainty of today's rate on the whole amount.
- The lender's lump sum rate is materially lower than its drawdown rate (sometimes it is).
Things to check on a drawdown plan
The minimum drawdown amount; whether the facility can be withdrawn by the lender (it can, in rare circumstances, on some plans); whether future drawdowns are at a rate fixed now or at the rate then; and whether there is a fee per drawdown (there should not be).
A note on the numbers. Rates, loan-to-value limits, fees and timescales are typical figures at the time of writing (2026) and vary between lenders and with your age, health and property. This is information, not advice. Equity release must be arranged through an FCA-authorised adviser, who will give you a personalised illustration before you commit to anything.
Quick answers
Can I switch from lump sum to drawdown later?
Not on the same plan, but you can usually add a further advance to a lump sum plan later, which does a similar job. Better to choose drawdown at the start if there is any doubt.
Is the drawdown facility guaranteed?
On most plans the lender reserves the right to withdraw the unused facility in exceptional circumstances (for example if they stop lending). It is rare. Ask the adviser about the specific lender's record.
Ready to talk to someone who can actually do it?
We introduce you to a qualified, FCA-authorised equity release adviser who will look at every option, tell you how much you could release and how fast, and never charge you for the first conversation. No obligation.