Are you retired and you have specific health issues that are worrying you? Do you own a home that’s worth over £70,000 in the UK? Well, then you’re eligible to take out an Enhanced Lifetime Mortgage plan as a form of borrowing money for your health issues.
Let’s look into enhanced lifetime mortgages.
ENHANCED LIFETIME MORTGAGE PLANS
An enhanced lifetime mortgage plan, also known as an impaired lifetime mortgage plan, gives you a reasonable amount of money or low interest rates compared to the standard lifetime mortgage plans that are out there. This mortgage plan is a lifetime mortgage option which will offer you capital. This capital or equity is tied up, as a manner of speaking, in your home. It’s specifically created for people over the age of 55 that own a home.
There are some prerequisites to taking out such a lifetime mortgage plan. The property that you want to release equity from needs to be within the UK. Your property needs to be valued at £70,000 minimum.
Best of all!
This enhanced mortgage plan allows you to access more equity and cash if your health is low. At the same time, other lifetime mortgage plans don’t offer this fantastic benefit.
What does this mean for you?
Well, to qualify for this lifetime mortgage plan and you have health issues, listen up. As mentioned before, you’ll be eligible for the enhanced or an ill-health lifetime mortgage scheme if you suffer from pre-existing health conditions, you’re older than 55 and own a home worth more than £70,000 and in it’s the UK.
You might be wondering: What health conditions?
And how does this mortgage plan offer you more when you have health issues? The enhanced lifetime mortgage plan works according to the principle that your life expectancy is probably lowered due to your ill-health. Some of the medical conditions they cover are:
- Parkinson’s disease
- Multiple sclerosis
- Cancer and in need of surgery, chemo or radiotherapy
- High blood pressure
- Angina, heart attacks, a stroke etc.
- If you’re a tobacco or cigarette smoker
The weaker your health is, the more cash you’ll be allowed to unlock from your property, and the lower your interest rates will be.
It’s a well-known fact that health issues increase as one gets older, or that’s a fact for many people today. The stats are that at leastretired people suffer from high blood pressure or have had a severe heart attack. Therefore, funny enough, if you a history of medical illnesses you could be getting added benefits!
Let me tell you something:
It seems to be in your best interest to take out an equity release plan, such as the enhanced lifetime mortgage plan. You’ll gain access to more capital, and you’ll pay much less interest compared to other mortgage plans on the market.
Your provider can use the same backing as annuities, and they’ll use your life expectancy ratio to calculate how much cash you can get out of your equity release plan.
HOW DO ENHANCED LIFETIME MORTGAGES WORK?
Providers offer these plans as a lump-sum1 or on a drawdown basis. They’re very similar to the enhanced annuity plans, but the enhanced lifetime mortgage plans give you a decent lump-sum. But also, the more serious your health history is, the more cash you’ll receive out of this plan. The catch behind the benefit is lower life expectancy, unfortunately.
You receive a cash lump sum from the get-go. This means a successful equity release from your property. You don’t need to make monthly repayments, and it’s tax-free money you unlock. The release equity has fixed duration interest rates which then compounds throughout the plan.
So, once the owner dies or needs permanent medical care, their provider will sell the property and the remaining funds will pay off the mortgage, the rest will go to close family or heirs of the estate.
WHAT ARE THE QUALIFICATION CRITERIA?
To qualify and apply for an enhanced lifetime mortgage plan, your health history comes into consideration. Due to life expectancy being a primary factor of these mortgage plans, your provider will offer you a reduced interest plan and more capital.
As mentioned above, providers offer a questionnaire on health and lifestyle where they consider:
- If you’re a smoker
- Your BMI, or body mass index2
- Your blood pressure levels
- Angina, heart attack, or strokes
- Multiple sclerosis or Parkinson’s disease
- If you’ve retired earlier because of your ill health
- Any prescription medication
After filling in their questionnaire, they’ll be able to tell you how much they’ll loan you. However, the list isn’t all-inclusive. So if you have any other disease, let your provider know, and they might be able to release even more capital for you.
HOW IS THE PLAN CALCULATED?
Enhanced lifetime mortgages are calculated using the age of the youngest homeowner or applicant and their property portfolio. However, if they have any impairments, then the provider will do some more calculations to make sure you get the most money possible with your circumstances.
The way to calculate illness or impairment level works is by using a health and lifestyle questionnaire, which contains direct questions. If the applicant has any of the listed conditions, the provider will have to offer you the enhanced plan, depending on how severe your impairments or illnesses are.
Let me just say…
Every provider has its rules and requirements on increasing your loan or decreasing your interest rates. Every provider also has its way of estimating your life expectancy, which also affects your loan amount.
WHICH COMPANIES OFFER ENHANCED MORTGAGE PLANS?
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 than their standard terms.
They also contain some differences:
- The Aviva Lifestyle Flexi Plan offer you with a decreased interest rate if the maximum amount isn’t required.
- More2Life offers you an enhanced drawdown facility with an increased cash reserve for the future.
- Just Retirement then offers you a more comprehensive Lifestyle Questionnaire which considers other conditions that other equity release plans don’t cite.
It’s relatively easy to determine what amount you can get when you take out an enhanced mortgage through an equity release provider. You simply need to input a few details, and there you have it!
It’s a great and empowering option if you need to borrow some extra or much-needed cash and you have an illness or impairment. If you’re still considering whether or not enhanced lifetime mortgages are for you, feel free to contact us with any further questions.