An enhanced lifetime mortgage is an option to consider if you have any history of pre-existing health conditions (ill-health). By letting us know what your health issues entail, our advisers can take these into consideration when researching the best lifetime mortgage deal for you across the whole of the market.
In essence, the greater the severity of your condition(s), the greater the enhancement will be. Subject to your GP confirming the accuracy of your medical records, your enhancement could either be to release a larger lump sum, obtain an increased drawdown facility, or to secure a lower rate of interest.
Like enhanced annuities, enhanced lifetime mortgages are calculated on the underwriting principle that ill-health usually leads to a reduced life expectancy. Simply put, the number of qualifying health conditions you have, will determine how much more you can borrow, or the extra reduction in interest rate.
Even relatively minor health conditions, such as smoking, high blood pressure or high cholesterol which are being managed through prescription drugs, could entitle you to an enhanced lifetime mortgage. So lenders will ask you to complete a health and lifestyle questionnaire to calculate how much they'll lend.
It is worth noting the questionnaire will differ depending on the lender, so we recommend that you speak to an Equity Release Supermarket adviser to find the right provider for you. Using our enhanced lifetime mortgage calculator, will give you an idea of the maximum you can borrow based on the severest health scenario.
Only a handful of lenders offer enhancements to lifetime mortgages, and with these schemes being specialised, the rates do tend to be higher. However, for those with no beneficiaries, a large mortgage to repay or wanting the lowest interest rate possible, enhanced lifetime mortgages can be a excellent solution.
As the loan terms are typically shorter than standard lifetime mortgages, lenders are more likely to offer you a larger tax-free lump sum or an increased drawdown facility.
You do have a choice. However, if no payments are made, the amount borrowed, plus accrued interest is repaid when you die or move into long term care.
Enhanced plans can still include flexible features such as guaranteed inheritance, drawdown facility, or voluntary payments.
The more qualifying health conditions you have, the more you can typically borrow as a tax-free lump sum.
If you choose to release less than the maximum, the lender may offer you a lower interest rate than normally available. Conversely, where a drawdown facility is present, its limit will be increased to the size of the new enhanced loan facility.
If your health issues are mobility-related, the amount you release from your enhanced plan could help to pay for the home modifications you need.
Just complete a short health and lifestyle questionnaire. The lender may need to write to your GP under certain circumstances.
While you receive a large lump sum from releasing equity from your home, you remain the legal owner of the property. This a common feature of all lifetime mortgages.
By choosing to release the maximum amount of equity, you run the risk of leaving your family with little, or no inheritance. To understand the inheritance implications in detail, speak to your local Equity Release Supermarket adviser.
Enhanced lifetime mortgages offer a maximum lump sum option. If you choose to take the maximum amount of equity you could impact your entitlement to certain means-tested benefits.
As these are specialist lifetime mortgages and provide additional risk and underwriting than for ‘standard’ lifetime mortgages, the rates are higher where the maximum loan is being taken.
Lifetime mortgages are designed for the long term. If repaid early, penalties applied could be as high as 25% of the amount borrowed, or they could taper down to zero over a fixed number of years. There is no ERC on death or moving into long-term care, or for joint plans includes the 3-year compassionate waiver feature.
Lenders will select health and lifestyle questionnaires for checking, and if necessary can write to your GP for a report. Depending on your GP this could slow down your application and how quickly you receive your money.
Only a few lifetime mortgage lenders offer enhanced equity release plans, so your options when considering lender are limited.
If you decide to take the enhanced lump sum option, then due to the combination of increased loan size and interest rate, it will reduce your chances of remortgaging at a later date.