The move gives customers the benefit of financial advice on a key aspect of retirement planning and will allow them to choose the amount that suits them.
Responsible Lending plans to use assessments of the suitability of drawdown to ensure customers find products in the lifetime mortgage market that best suit their needs.
Since its introduction in 1995, drawdown has been a valuable innovation for customers, giving them a cash facility with no interest charged until they take the money.
Problems have arisen, however, when customers have been given drawdown facilities that were too large for their needs.
Responsible Lending aims to eliminate this problem by making it possible for the customer’s financial adviser to adjust the size of the cash reserve facility to ensure it suits the customer’s plans.
Borrowers will be encouraged to borrow the right amount for their needs, rather than just take the maximum available.
‘The responsible thing to do’
Keith Haggart, managing director of Responsible Lending, said: “Lifetime Mortgages have come a long way in recent years and this latest innovation completes the circle for regulated financial advice on these kinds of products.
“There is now no area of a Responsible Lending lifetime mortgage that is not tested against its impact on a borrower’s financial position, both now and into the future.
“This is the responsible thing to do and we expect this feature to become an industry standard.”