Enhanced Lifetime Mortgage
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An enhanced lifetime mortgage could be the solution you’ve been waiting for if your health isn’t the best and you need access to extra funds.
For once, your poor health could be beneficial, but how?
As experts in our field, we discuss the following in this article:
Our journalists at EveryInvestor spend countless hours researching the later-life lending markets to bring you the most up-to-date and relevant information.
Find out more!
What’s an Enhanced Lifetime Mortgage?
An enhanced lifetime mortgage is a type of equity release option that considers your health conditions.
The benefits of this are that you can either release more money than a standard lifetime mortgage, or your interest rate could be reduced as a result of your health.
How an Enhanced Lifetime Mortgage Works
An enhanced lifetime mortgage works by taking your health conditions into consideration when you apply for a lifetime mortgage product.
You’ll complete a questionnaire in your application and include any health information; you’ll also be asked to submit relevant medical records.
Should you have any conditions or meet specific criteria, you could be considered for an enhanced lifetime mortgage.
Here are some of the conditions considered by providers:
- Being a smoker.
- High blood pressure.
- Heart disease.
- A high BMI.
- Other serious illnesses.
With an enhanced lifetime mortgage, you’ll be able to access the maximum LTV from your property.
You’ll also have the option to choose between a lump sum mortgage or a drawdown option.
Do I Qualify for an Enhanced Lifetime Mortgage?
You could qualify for an enhanced lifetime mortgage if you have any of the health conditions the lender highlights as qualifying concerns.
However, to what degree your health condition will enhance your lifetime mortgage will all depend on the seriousness of it.
If you’re a smoker, you won’t receive as high an LTV as someone who has advanced cancer or other life-threatening illnesses.
Your application will be processed on its own merits, and you’ll be informed of the lender’s decision.
Is There an Age Limit for Enhanced Lifetime Mortgages?
The age limit for an enhanced lifetime mortgage is 55 years old for most lenders.
Should you be making a joint application for an enhanced lifetime mortgage, then the youngest applicant needs to be 55.
The LTV you can expect with an enhanced lifetime mortgage increases as you get older; most lenders don’t have an upper age limit for enhanced lifetime mortgages.
Other lenders, however, will accept applicants for an enhanced lifetime mortgage up until the age of 95.
How’s the Equity Release Enhancement Calculated?
The equity release enhancement is calculated based on the severity of the youngest applicant’s health condition.
Each enhancement is individually allocated; you’ll either get a more considerable lump sum, a more extensive drawdown facility or a lower interest rate.
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What Are the Advantages of Enhanced Lifetime Mortgages?
The advantages of an enhanced lifetime mortgage include that you don’t have to undergo a medical to qualify.
Here are more details:
- You don’t need to have a medical to qualify but may have to submit medical records.
- A no-negative equity guarantee will still keep you protected.
- The money you release still stays tax-free.
What Are the Disadvantages of Enhanced Lifetime Mortgages?
The disadvantages of an enhanced lifetime mortgage are that releasing a large amount of capital from your home will decrease your estate’s value.
Here are more details:
- It could take longer to get approved if you require a medical or a doctor’s report.
- A more considerable amount of money being paid out can affect your eligibility for means-tested benefits.
- You’ll still incur early repayment charges if you decide to settle your mortgage.
Features of an Enhanced Lifetime Mortgage
The features of an enhanced lifetime mortgage include releasing more money from your property than with a standard lifetime mortgage.
Here is more detail:
- You get to stay in your home until you pass on or move into permanent care.
- The option to choose between a lump sum and a drawdown plan is available to you.
- The interest rate you’re given is fixed for life.
- Specific plans allow you to take inheritance protection.
- Providers need to give you a no-negative equity guarantee.
Could I Fall Into Negative Equity With an Enhanced Lifetime Mortgage?
No, you can’t fall into negative equity with an enhanced lifetime mortgage as the lenders who offer these plans are regulated by the Equity Release Council1.
This means that the chosen provider has to give you a no-negative equity2 guarantee.
How Much Can I Borrow With an Enhanced Lifetime Mortgage?
How much you can borrow with an enhanced lifetime mortgage will depend on a few factors, such as the severity of your health condition, your age, and property value.
With a standard lifetime mortgage, you can release up to 60% of the market value of your property.
Which Companies Offer Medically Enhanced Equity Release?
The 2 companies that offer medically enhanced equity release are Aviva and Just Retirement.
How Long Does It Take To Get an Enhanced Lifetime Mortgage?
How long it takes to get an enhanced lifetime mortgage depends on your situation’s complexity; however, it should take more or less 6 weeks to complete an application.
Who’ll Benefit From an Enhanced Lifetime Mortgage?
Those who’ll benefit from an enhanced lifetime mortgage include people with serious health conditions or those who smoke or drink alcohol regularly.
If you have an illness, require live-in care, or need home modifications to cope with your condition, an enhanced lifetime mortgage can help you afford these.
What’s a Drawdown Enhanced Lifetime Mortgage?
A drawdown enhanced lifetime mortgage is a plan where a small lump sum is paid out upfront, and the balance of funds is kept in reserve to use later as needed.
The benefit of this is that you only pay interest on the amount that you’ve actually received and not the full amount approved.
What’s a Medically Enhanced Equity Release Plan?
A medically enhanced equity release plan is one that takes your health concerns into account.
It gives you access to your home’s capital like a normal lifetime mortgage; however, due to your health, you’ll get a higher LTV or lower interest rate.
What's Enhanced Equity Release?
Enhanced equity release is equity release that caters for your health conditions and gives you access to a higher value LTV.
Do You Need a Medical for Equity Release?
No, you don’t need a medical³ for equity release.
Is Enhanced Lifetime Mortgage A Good Idea?
An enhanced lifetime mortgage is a good idea if you have a health concern and need access to more funds to help you take care of yourself.
Can You Pay Back An Enhanced Lifetime Mortgage?
Yes, you can pay back an enhanced lifetime mortgage; however, keep in mind you may incur early repayment penalties.
If you’re ill or have any chronic health concerns, it’s best to specify them when applying for a lifetime mortgage.
By doing so, you could be considered for an enhanced lifetime mortgage which will give you access to more capital from your home to help you pay for the care you need.
Before making any decisions about an enhanced lifetime mortgage, you should speak to your trusted adviser to ensure your needs are met.
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