A lump sum means the whole amount arrives at once. A drawdown plan means an initial advance and a reserve you can take from later. The appeal is that a reserve costs nothing until it is drawn. What is less often published is that it is priced when it is drawn, and that on at least one product it cannot be added to a plan afterwards.
This is not pension drawdown. It is a choice about whether you take the money in one go or leave some of it in a reserve, and the reserve is not free money waiting at your rate.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
A lump sum means the whole amount arrives at once and interest runs on all of it from day one. A drawdown plan means you take an initial advance and leave the rest in a reserve, and you take from the reserve later if you want it.
The appeal is obvious: Canada Life publish that on their plan you "only pay interest on the cash once you have withdrawn it", so money sitting in a reserve is not costing you anything. That is true and it is the reason drawdown exists. What it leaves out is what the money costs when you do take it.
Different product, different rules, different regulator wording. If you have arrived here from a pension search, this page is about borrowing against a house rather than taking money from a pension pot.
What equity release is →Canada Life publish that they apply a fixed rate to each withdrawal "based on the rate at the time you apply", and that this "might be higher or lower" than the rate on the initial advance. Money in a reserve is not held at today's rate.
What rates are doing →On that plan the cash reserve facility "can't be added at a later date". So it is not a feature you can decide about once the plan is running: it is part of the shape you pick on day one.
Their published minimum withdrawal is £2,000 and the maximum is the whole reserve. A reserve is not a current account, and small amounts are not what it is for.
Every figure above is Canada Life's published detail for one product, opened on 7 September 2026. Another provider will differ, and that is the point: these are the things to ask about rather than the answers.
Where this appears on an illustration →Neither is better. They answer different questions, and the honest way to choose between them is to work out which question you are asking.
Interest compounds, so the earlier a pound is borrowed the more it costs by the end. Taking £30,000 now and £30,000 in eight years is meaningfully cheaper than taking £60,000 today, because the second £30,000 spends eight fewer years compounding.
That is the real case for a reserve, and it is a good one. The counterweight is that the later money is priced when it is taken, so a lower balance can meet a higher rate. Which of those wins is not knowable in advance, and anybody who tells you it is has stopped describing and started predicting.
Whether a reserve will still be there. Ask what the provider may do with an undrawn facility and in what circumstances, because the answer differs between products and is in the terms rather than the brochure.
What a later withdrawal will cost. Nobody knows, because it depends on the rate when you take it. What an adviser can tell you is how that provider sets it.
Which one suits you. That is a recommendation, it depends on things this page cannot see, and making it is regulated advice we are not authorised to give. Every figure above is one provider's published detail on one date and is not a market rule.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
These are facts about the products rather than about you, and an adviser can give you all of them in one conversation.
Questions for the adviser, once you know which question you are asking.
Can the reserve be added later, or is it a decision I make now?
On at least one published product it cannot be added later. If that is true of the plan in front of you, the choice is less reversible than it sounds.
What rate will apply to money I take from the reserve in five years?
The honest answer is that nobody knows, followed by how that provider sets it. Any other answer is worth pressing on.
What is the minimum I can withdraw at a time?
It decides whether the reserve fits the way you would actually use it.
Can the provider reduce or withdraw the reserve, and when?
An undrawn facility is not the same as money in an account, and the terms say what it actually is.
What does the illustration show for each shape?
Two illustrations side by side answer this better than any general comparison, including this one.
Short answers to the things that come up most. None of it is advice, and every figure on this page carries its source.
No, and they are easy to confuse because they share a word. Pension drawdown is taking money from a pension pot. Drawdown equity release is a lifetime mortgage where you take part of the borrowing now and leave the rest in a reserve to take later.
On the product we checked, no. Canada Life publish that you only pay interest on the cash once you have withdrawn it. That is the main reason drawdown exists, and it is worth confirming for the specific plan you are shown rather than assuming it holds everywhere.
Not necessarily, and this is the part most often missed. Canada Life publish that each withdrawal is fixed at the rate at the time you apply for it, which might be higher or lower than the rate on your initial advance. A reserve is not money held at today's rate.
On the product we checked, no: the cash reserve facility cannot be added at a later date. So on that plan it is a decision made when the plan is set up rather than an option kept open, which is worth knowing before you choose a shape.
On the product we checked the minimum withdrawal is £2,000 and the maximum is the whole reserve. A reserve is not a current account, so if you were thinking of taking small amounts frequently it may not do what you have in mind.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
One qualified equity release adviser. They will go through your figures and tell you if there is a better answer. It costs nothing and commits you to nothing.
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