Are you considering releasing equity from your home? If so, you will need to work with your financial adviser to look at various factors to see which plan is right for you. You might even qualify for an impaired life or enhanced equity plan, allowing you to release even more money from your property.
This article will explain what an impaired life or enhanced equity release plan is, how it works, and who should use one!
What Is an Enhanced Equity Release Plan?
It is equity release, but a series of plans that are available for individuals who may, unfortunately, have a lower life expectancy, due to medical conditions.
Learn about: What’s Equity Release?
What are the Advantages of an Enhanced Equity Release Plan?
There are a few advantages to an impaired life or enhanced equity release plan:
- You can release up to 30% more than on regular plans.
- Interest rates will likely be lower than other equity release plans.
- You release tax-free income.
- You can use it to buy an LTCi2 cover if you’re over 55 years old and your house is worth more than £23,250.
What are the Drawbacks of an Enhanced Equity Release Plan?
The drawbacks of an impaired life or enhanced equity release plan are:
- It’s not always easy to know how long you’ll need the funds and to budget accordingly.
- You’ll have less money left over in your estate to pass onto other beneficiaries
- You can’t use it if your house is worth less than £70,000
Also learn: Equity Release Pitfalls You NEED to Know
How Does an Enhanced Equity Release Plan Work?
An enhanced equity release plan works in the same way as an ordinary equity release plan, but you will need to fill out additional forms to indicate the state of your health. You will also need to declare any official diagnoses.
Who Should Use an Enhanced Equity Release Plan?
You should consider an enhanced equity release plan if:
- You are over 55 and own your home.
- You have medical conditions, like dementia, and you don’t have the financial means to pay your medical expenses.
- If you have a limited life expectancy and want to experience your final days financially free.
- If you have a chronic illness and need care, but you don’t want to go to a facility.
We recommend that you speak to an independent financial adviser to find out if you qualify for an enhanced equity release plan.
How Long Does an Enhanced Equity Release Plan Last?
Like all forms of equity release, the plan will end when you pass away or move into a permanent care facility.
What Can I Use the Money For?
The money from an impaired life or enhanced equity release plan can be used in any way you wish.
You might want to consider long term care!
Long-term care is defined as any assistance with walking, eating, dressing, and bathing that someone might need daily due to serious illness or disability. These expenses usually only come up after retirement age (around 65 years old), but this will depend on your circumstances!
An impaired life or enhanced equity release plan is a great way for people to prepare themselves for the future and plan.
Also, learn about: 12 Most Popular Equity Release Uses
You can set up an impaired life or enhanced equity release plan with a mortgage company to help you pay for long-term care expenses. The person who has dementia will need their GP’s3 permission, and they should contact the LTCi provider before signing any documents.
The lender will then let you know how much equity is available to be released from your home. They’ll also consider how much you need for care costs and what your home is worth when they assess whether or not it’s a viable option.
How Much Does Impaired Life or Enhance Equity Release Cost?
The cost will vary depending on the fees of your plan provider and your financial planner. In addition, you will pay compound interest. Luckily, equity release interest rates are currently at an all-time low.
How Much Am I Giving Up With an Impaired Life or Enhanced Equity Release Plan?
While you will still retain full or part ownership of your home (depending on your plan), you are giving up providing your family with the funds from the sale of your estate when you pass away or move into permanent care.
How to Know If Impaired Life or Enhanced Equity Release Plan Is For Me?
If you have a chronic or life-threatening illness, you need funds, and you have looked at all the alternatives, then an impaired life or enhanced equity release plan might be right for you. It’s best to speak to your financial adviser to look at all your options.
What Happens If I Die Before My Ltci Cover Has Expired?
The mortgage company will keep paying your monthly premiums for the rest of the term. The benefits are then distributed at a later date, which might be after you’ve died or when someone else dies with an outstanding policy.
The impaired life or enhanced equity release plan is a new way to help people with disabilities and their families decide how they want to live.
It’s an alternative for those who can’t afford the cost of long-term in-home care, but still need some assistance in daily living activities.
This type of financing allows you to only have the loan repaid when you pass away or move into permanent care. Use our equity release calculator to find out how much cash is available to unlock from your home!