A Complete Guide to Enhanced Lifetime Mortgages in 2022
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 financial lifeline 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 carried out a detailed analysis of the market, and 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?
An enhanced lifetime mortgage is a type of equity release plan that allows you to unlock more cash, with lower interest rates, if you suffer from a health or lifestyle condition. It’s also known as an impaired lifetime mortgage.
How Does an Enhanced Lifetime Mortgage Plan Work?
An enhanced lifetime mortgage works with the homeowner completing a health and lifestyle questionnaire, and if they qualify.
The lender will offer them a plan with lower interest rates and maximum equity, based on the severity of their condition.
Tax-free cash is released in a lump-sum, drawdown facility, or a combination of both. Finally, the loan, plus interest, only needs to be repaid when you pass away or enter long-term care.
9 Enhanced Lifetime Mortgage Qualification Criteria
Whether you qualify for the enhanced lifetime mortgage plan4 will depend on your medical history. Should you wish to apply, your provider will give you a health and lifestyle questionnaire.
The following conditions will be considered in 2022:
- Regular cigarette or rolling tobacco smoking.
- Having a high body mass index (BMI)¹.
- 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 enquire 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:
- A more significant amount of cash than offered by the standard equity release schemes.
- Lower interest rates than the standard equity release schemes.
- 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 withdrawal amount, however.
- 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’.
- The questionnaire you complete is simple and straightforward, and the entire process is generally stress-free.
6 Enhanced Lifetime Mortgage Pitfalls
As with any other equity release scheme, there must always be a degree of caution. Some of the facts you need to consider include:
- By unlocking the maximum enhanced equity release, you might have little or no inheritance left to pass on.
- The interest rates, in as much as they are minimal, tend to be higher than on conventional 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 benefits².
- 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, More2Life Equity Release, and Just Equity Release.
These brokers offer you higher maximum lump sums for enhanced lifetime mortgages than with their standard terms.
3 plans you could consider in 2022:
- 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 gives 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?
An impaired lifetime mortgage plan calculation is dependent on the age of the youngest homeowner and the property’s portfolio³.
However, if there’s any impairment, the lender will undertake more calculations to ensure you get the highest amount suited to your circumstances.
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.