Enhanced Equity Release Plans in Jan 2022

Defining an Enhanced Equity Release Plan: Your Poor Health Could Work in Your Favour

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

Many People Are Getting Older, and Their Retirement Accounts Are Not Going to Last Forever. If You Want Your Money to Last as Long as Possible, Then You Should Consider an Impaired Life or Enhanced Equity Release Plan.

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Enhanced Equity Release Plan: What’s it For?

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’s an Enhanced Equity Release Plan?

An impaired life or enhanced equity release plan is a type of annuity1 that allows people to generate income from the equity in your home, and it can also help you pay for long-term care expenses.

It’s 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's an Impaired Life

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.
Advantages

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

Drawbacks

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.

how does it work

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.

Who Should Use It

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.

How Long Does It Last

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

Using The Money

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 To Set Up

Common Questions

How Much Does Impaired Life or Enhance Equity Release Cost?

How Much Am I Giving Up With an Impaired Life or Enhanced Equity Release Plan?

How to Know If Impaired Life or Enhanced Equity Release Plan Is For Me?

What Happens If I Die Before My Ltci Cover Has Expired?

In Conclusion

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!

Finally, learn all about the top equity release companies to see who has the appropriate enhanced equity release plan for you, and know which providers are best to avoid.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
francis

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
nicola

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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