Did you know that your medical history can play a massive role in how much equity you can release from your home? While we all want to be healthy in our golden years, this, unfortunately, isn’t the case for all.
Let’s take a look at how your medical history can affect the amount of equity release available to you and why this is so important.
What are Enhanced Lifetime Mortgages?
If you have a medical condition and would like to pursue an equity release, you may be eligible for an enhanced lifetime mortgage with a reduced term. This means that you can have access to more can than someone who doesn’t suffer from any medical conditions, as your life expectancy is possibly shorter.
Suppose you have a life expectancy of 15 years or less, and suffer from a severe illness like cancer, your equity release term could be reduced to just ten years. This is compared to someone who has no medical conditions and can expect their lifetime mortgage term to last a lot longer, as general life expectancy is up until 80-years-old.
It’s essential that we understand how our medical history impacts the amount of equity release available. Several factors affect the calculation, including age and life expectancy, as well as any medical conditions you may have.
However, the good news is that this doesn’t restrict your choice when it comes to taking out an equity release. There’s even more opportunity for those who’ve had surgery or suffer from serious illness!
Perhaps this is a light in a very dark tunnel?
4 Equity Release Providers That Offer Enhanced Lifetime Mortgage Plans
- Just Retirement
- Age Partnership
The More2Life offer is quite different from the others. They’re a specialist provider for those looking at retirement and have already achieved their lifetime mortgage requirements.
Just Retirement offers lifetime mortgage rates to those who’ve suffered any type of surgery or have a severe illness.
Age Partnership offer enhanced rates for anyone over the age of 62 with an interest in equity release.
Meanwhile, Aviva offers its rate to anyone aged 55-65 looking at retirement.
12 Common Health Factors Considered for an Enhanced Lifetime Mortgage
These factors are considered for an enhanced lifetime mortgage on top of the standard requirements for equity release. You’ll need to fill out a health and lifestyle questionnaire to assess your eligibility1. Many qualifying impaired health conditions apply across all lenders, including:
- Height and weight
- Smoking details
- High blood pressure
- Heart attack
- Parkinson’s Disease
- Multiple Sclerosis
- Early retirement due to ill health
- Even whether prescription medication is being taken
3 Qualifying Criteria for an Enhanced Equity Release
There are several qualifying criteria for an enhanced equity release which include:
- Being aged 62 or over on the date that you apply.
- Having at least 25% equity in your home (you may have more than 25% if there is a spouse who owns part of the property).
- Living in your residence.
You’ll need to provide a copy of your medical records and your spouse’s, if applicable. You may be able to get this information from your general practitioner2 (GP) or hospital consultants, but it’s worth asking the lenders, too, as they might have copies on file. Your financial adviser can also help you with any questions about whether you qualify for an enhanced equity release mortgage.
If these conditions are met, then there could be up to 55% more available funds than those who do not meet these criteria.
This means that in some cases, people aged 65-70 (depending on how much home equity they already own) could borrow £120k instead of just £80k!
However, it’s essential for those who don’t meet these criteria to remember that they could still borrow £80k, depending on how much equity is tied up in your home.
How Advantageous is an Enhancement?
With an enhanced equity release plan, you can borrow a lot more than you can with an ordinary equity release.
In most cases, people get around 55% more cash from an enhancement. This means that you could access up to £40,000 more in equity release funds (dependent on your circumstances).
However, there are some exceptions, such as if your home is worth less than £60K, or your partner passed away, then this would not apply to you. You would only receive an amount that matches what can be borrowed without any enhancements in place.
This may mean that they would need to use different methods of maximizing the amount of tax-free cash available, such as taking out a reverse mortgage or selling the property and renting instead.
However, these options come with inherent risks, so it is essential to be aware before deciding how best to fund your retirement years (or if you have already purchased a home).
If you have additional medical expenses, but are cash strapped, you could use the cash you release to provide yourself with the best possible medical support on the market. In addition, illness can be challenging. Releasing equity could help give you comforts to make your journey smoother.
Get inspiration from: 12 MOST POPULAR Equity Release Uses
Will I Need to Have a Medical Assessment?
If you’re over 65 and looking to remortgage your property, then lenders will need medical documentation.
This means that they want proof of age, a statement from the GP or another medical professional such as an optometrist3 confirming sight tests have been conducted recently. These check-ups must be no more than three years old.
How Do I Find Out if I Qualify for Enhanced Terms?
You should talk to a qualified equity release specialist. They will make recommendations accordingly. Equity Release Specialists are regulated by the Financial Conduct Authority (FCA4) and can only discuss all the options with you.
You can find an equity release specialist in your area on the Equity Release Council’s website5 – this is free of charge and will include their contact details, qualifications, and how long they’ve been working as an equity release adviser.
Will I Lose the Equity in My House if I Get Enhanced Terms?
No, you’ll still have a residential property. You can stay in your home until you pass away or move into permanent care with an enhanced equity release mortgage.
You can also leave money from your estate to heirs after death (subject to usual inheritance tax rules). If there is sufficient equity left over at that point, these funds could be released on Enhanced Terms.
What Should I Consider Before Taking Out Enhanced Terms?
You may want to consider how long you expect to live, whether your assets are sufficient for providing an income for life, and what happens if the house needs any expensive repairs.
What Happens if I Go Over My Maximum Amount?
If you go over your maximum amount, then Enhanced Terms will not be available. You would need to repay the loan in full before being able to apply again for a new equity release mortgage or move into rented accommodation.
How Much Does It Cost to Set Up an Enhanced Lifetime Mortgage?
If the equity release specialist has written a report recommending an enhanced lifetime mortgage, there will be no additional charge for setting it up. This is because lenders take this into account when they calculate your borrowing costs, and you’ll get a better deal as a result.
It’s important to know that various factors can affect the maximum equity release. Each borrower’s medical history and financial situation are unique, so they need to speak with their lender about what will work best to get the most out of this type of loan.
In addition, you can try out one of our Equity Release Calculators to get a sense of how much cash is tied up in your home! You might be able to complete your bucket list in your remaining days.