A Complete Guide to Enhanced Lifetime Mortgages
Your retirement finances could be one less thing to worry about!
If you’re 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 lifeboat you’ve been searching for.
While we sadly can’t take away your illness, we can guide you on how equity release can make things easier. We’ll help you discover:
- How a enhanced lifetime mortgage works.
- The illnesses covered with an enhanced lifetime mortgage.
- The pros and cons of enhanced lifetime mortgages.
We’ve done a detailed analysis of the market, spent countless hours studying over 220 plans, so we’re in the perfect position to offer you professional advice.
Could an enhanced lifetime mortgage enhance your life? Find out now!
What’s an Enhanced Lifetime Mortgage?
You can unlock the maximum equity and get the lowest interest rate with an enhanced lifetime mortgage. However, not everyone qualifies.
The enhanced lifetime mortgage,2, also known as the ‘impaired’ lifetime mortgages, is an equity release scheme where the lending criterion depends on your health records.
The plans allow you to unlock more equity based on the answers you convey on the health and lifestyle questionnaire your lender will provide.
The weaker your health:
– The more equity you can unlock.
– The lower the interest.
Is an enhanced lifetime mortgage not for you? Check out: Types of Lifetime Mortgage Schemes
How Does an Enhanced Lifetime Mortgage Plan Work?
Although not new in concept, the latest invention of the equity release market is the enhanced or impaired lifetime mortgage scheme, often labelled an ‘ill-health equity release’.
Should you qualify, you’ll be able to select from a lump-sum, drawdown facility, or a combination of them both, as a means to unlock your cash.
Like the enhanced annuity plans, the enhanced lifetime mortgage provides you with a favourable amount of equity to release. The more severe your health history, the more money you get. The premise behind the enhancement is a lower life expectancy.
Like other forms of equity release, you’re not required to make any monthly payments, and the cash you unlock is tax-free. In addition, there’s a fixed interest rate that compounds over the life of the loan.
Once the last homeowner dies or goes into residential care, the lender will put your property on sale and use the proceeds to pay off the mortgage primarily, and the balance goes to your heirs.
9 Enhanced Lifetime Mortgage Qualification Criteria
If you qualify for the enhanced lifetime mortgage plan4 will depend on your medical history. Should you wish to apply, your provider will offer you an honest health and lifestyle questionnaire.
The following conditions will be considered:
- Regular cigarette or rolling tobacco smoking.
- Having a high body mass index (BMI).
- High blood pressure.
- Medical complications such as angina, heart attack, strokes, etc.
- If you’ve been diagnosed with cancer requiring surgery, chemo, or radiotherapy.
- Multiple Sclerosis or Parkinsons.
- If you retired early due to ill health.
- If you’re on prescription medication.
If your condition isn’t listed, you must still inquire about it with your financial adviser and equity release lender. You might still be able to qualify for an enhanced lifetime mortgage.
8 Enhanced Lifetime Mortgage Benefits
An enhanced lifetime mortgage plan allows you to enjoy several benefits, including:
- It offers you a more significant amount of cash than the standard equity release schemes.
- It allows lower interest rates than the standard equity release schemes.
- It’s a completely unique financial product in that it allows you to benefit from poor health records.
- The equity you unlock can allow you to make some much-needed home modifications if your medical issues are mobility-related.
- There’s an option for a drawdown facility so you can access cash for big medical expenses, whenever it’s required. Drawdown facilities do come with a minimum withdawal amount.
- Lenders do not require you to have a medical, in order to qualify.
- Even after unlocking a larger amount of cash, you’re still safeguarded with the ‘no negative equity guarantee’.5
- The questionnaire you complete is simple and straightforward, and the whole process is generally stress-free.
6 Enhanced Lifetime Mortgage Pitfalls
Like with any other equity release scheme, there must always be a degree of caution. Some of the facts you need to consider:
- By unlocking the maximum enhanced equity release, you might hand little or no inheritance.
- The interest rates, in as much as they are minimal, tend to be higher than on conventional standing mortgages.
- The plans could take longer to set up if your broker requires you to provide a doctor’s report.
- Taking a more considerable lump sum might affect your entitlement to means-tested benefits.
- The companies could levy early repayment charges if you decide to settle the plans earlier than intended.
Which Companies Offer these Mortgage Schemes?
Equity release companies specialising in the impaired lifetime mortgages plans include, but are not restricted to:
- Aviva Equity Release Reviews
- Just Retirement
These brokers offer you higher maximum lump sums for enhanced lifetime mortgages than with their standard terms.
3 plans you could consider:
- The Aviva Lifestyle Flexi Plan provides you with a lower interest rate if the maximum amount isn’t required.
- More2Life offers you an enhanced drawdown facility with an increased cash reserve for future use.
- Just Retirement then goes on to serve you a more comprehensive lifestyle questionnaire which considers other conditions that most equity release plans don’t cite.
How Is an Impaired Lifetime Mortgage Plan Calculated?
The impaired lifetime mortgage plan calculation is dependent on the age of the youngest proprietor and the property’s portfolio. However, if there’s any impairment, the lender will undertake more calculations to ensure you get the highest amount suited to your circumstances.
The platform used to calculate your impairment level is determined using the health and lifestyle questionnaire. Based on the severity of your conditions, you’ll then be made an offer. This offer may differ from one lender to the next.
Illness can take a toll on both you and your family. While equity release won’t cure you, it can, at least, give you some comfort during these difficult times.
Therefore, you should contact your professional financial adviser today to see how much equity you can release from your home.
For more information on these plans and more though, be sure to click here and see how much equity you can release and get in touch with an expert free of charge.