Your retirement finances could be one less thing to worry about with an enhanced lifetime mortgage!

If you are suffering from a life-threatening or severe illness, the last thing you want to worry about is money. Life is hard enough, but living with medical bills, debilitating pain, and financial stress can be torturous.

An enhanced lifetime mortgage could be the financial option you have been searching for.

Whilst we sadly can not treat your illness, we can guide you on how equity release can make things easier.

Our financial experts at SovereignBoss have carried out a detailed analysis of the market and spent countless hours studying available plans, to provide you with this information.

Could an enhanced lifetime mortgage be suitable for your circumstances? 

Therefore...

What Is an Enhanced Lifetime Mortgage?

From the different equity release schemes available, an enhanced lifetime mortgage is a type of plan designed for individuals with specific health or lifestyle conditions. 

It usually offers higher loan amounts or lower interest rates than standard lifetime mortgages.

How Does an Enhanced Lifetime Mortgage Plan Work?

Enhanced lifetime mortgage plans allow homeowners to borrow a lump sum or receive regular payments secured against their property. 

The loan, plus accrued interest, is repaid from the sale of the property after the homeowner passes away or moves into long-term care.

9 Top Criteria for Qualifying for an Enhanced Lifetime Mortgage

The nine top criteria to qualify for an enhanced lifetime mortgage usually include:

1. Age: Typically, applicants must be aged 55 or older.
2. Medical history and enhanced lifetime mortgages: Lenders consider specific health conditions that may shorten life expectancy.
3. Lifestyle factors: Smoking or high body mass index (BMI) may be taken into account.
4. Medical history: Past illnesses or surgeries may be considered.
5. Medications: Certain prescribed medications can influence your loan.
6. Disability: Physical or mental disabilities may be taken into consideration.
7. Terminal illness: A diagnosis of a terminal illness may enhance eligibility.
8. Property value: The property must meet the minimum value requirements of the lender.
9. Property type: The property must be considered suitable by the lender, usually excluding leasehold flats and others.

Consulting a qualified equity release advisor or broker can help you determine whether you could qualify for an enhanced lifetime mortgage. 

How Is an Impaired Lifetime Mortgage Plan Calculated?

Impaired lifetime mortgages factor in an individual's health or lifestyle conditions to determine the loan-to-value (LTV) ratio¹ and interest rate. 

The greater the impairment, the higher the LTV and potentially lower the interest rate offered.

Pros and Cons

The pros and cons of an enhanced lifetime mortgage include that you can potentially receive a large sum of tax-free cash, but you can expect a decrease in the value of your estate.

Always analyse these pros and cons before making any major decisions.

6 Enhanced Lifetime Mortgage Benefits

Six benefits of an enhanced lifetime mortgage include:

• Flexibility: Borrow a lump sum or receive an initial lump sum, with the balance placed in a drawdown facility to access when required.
• Enhanced borrowing: With certain health or lifestyle conditions, you can qualify for higher loan amounts or lower interest rates compared to standard products.
• Tax-free cash: Homeowners can access a lump sum or multiple payments without incurring tax liabilities. While the cash is tax-free, other tax implications may apply depending on how the funds are used.
• No negative equity guarantee:² Ensures that you and your beneficiaries will never owe more than the value of your property.
• Retain property ownership: Continue living in your property for the rest of your life, maintaining ownership and benefiting from any potential future property value increases.
• Inheritance protection: Offered with some plans, this allows you, the borrower(s), to ring-fence a portion of your property's value for inheritance purposes. It could however also limit the loan amount you can borrow.

6 Enhanced Lifetime Mortgage Pitfalls

Six pitfalls of an enhanced lifetime mortgage to remember are:

• Impact on inheritance: You will not have the opportunity to leave your property to your heirs. For most, a property is the greatest asset.
• Accrued interest: If left unpaid, the final repayment amount may significantly exceed the amount borrowed.
• Long-term commitment: Early repayment may incur significant penalties.
• Eligibility restrictions: Qualifying for such a mortgage is only possible for specific health or lifestyle conditions required by lenders.
• Impact on means-tested benefits: Receiving a lump sum can affect eligibility for means-tested benefits, so you must calculate if it is the best option.
• Restrictions on property: For example, some lenders require that the property is kept in good condition, which could necessitate additional expenses.

With so many factors to consider, it is essential to discuss your options with a professional equity release advisor or broker to determine whether it is the best course of action.

Which Companies Offer These Mortgage Schemes?

The companies that offer enhanced lifetime mortgage schemes include Aviva and More2Life. 

Whilst it is important to conduct thorough research and compare options, here are some well-known, Equity Release Council-approved companies you can consider:

• Legal & General Home Finance
• Aviva Equity Release
• Just Group
• Canada Life
• Retirement Advantage (part of Canada Life)
• Pure Retirement
• OneFamily
• More2Life

A specialist financial advisor or broker will help you find the most suitable option.

Common Questions

In Conclusion

Enhanced lifetime mortgages provide a valuable opportunity for homeowners in the UK aged 55 and above to unlock the equity in their properties. 

There is potential for higher borrowing amounts, lower interest rates, and flexibility to suit individual needs. 

ELMs offer a practical financial solution if you are looking to enhance your retirement years. 

It is not for everyone, so be sure to speak to your family, look at all your options and consult a financial advisor or broker before opting for an enhanced lifetime mortgage.