Enhanced lifetime mortgages

If you're looking for the maximum equity release from your property, or a potentially lower interest rate, an enhanced lifetime mortgage could provide the solution.

Also known as ‘impaired’ lifetime mortgages, enhanced lifetime mortgages are an equity release scheme where lending criteria is based on your personal health records. More commonly, these schemes will allow more cash to be released depending on your answers given to a health and lifestyle questionnaire.

In other words, the poorer your health, the more you can borrow.

Do I qualify for an enhanced lifetime mortgage?

Whether you qualify for an enhanced lifetime mortgage or not depends on the type of health issues shown on your medical records. This is because the lender works on the underwriting principle that your life expectancy is likely to be reduced if you have experienced ill-health.

A simple health and lifestyle questionnaire will consider the following:
• Whether you smoke
• Your body mass index (BMI)
• If you have high blood pressure
• If you suffer from diabetes
• Medical problems such as angina, heart attack, stroke, cancer
• Multiple sclerosis or Parkinson's disease
• Retired early due to ill health
• Whether you are on prescription medication

This list is by no means exhaustive and if you have other health and lifestyle factors which are more severe, it could mean you are given a larger amount of cash from your release of equity.

How is the equity release enhancement calculated?

The enhanced lifetime mortgage calculation is based on the age of the youngest homeowner and the valuation of the property. However, if any impairment exists, then a further calculation is undertaken.

The platform for calculating the level of impairment is the use of a ‘health and lifestyle’ questionnaire which is simple and straightforward to complete.

Should any of these conditions apply, then enhanced terms can be offered by the lender, the level of which depends on the severity and number of illnesses. Each provider has their own criteria as to how much the loan can be increased, or interest rate reduced, all based on their perceived life expectancy of the homeowner.

Our enhanced lifetime mortgage calculator, below, will help give you an idea of the maximum lump sum available.

What are the advantages of enhanced lifetime mortgages?

• Enhanced lifetime mortgage plans provide bigger lump sums, or lower interest rates than standard equity release schemes.
• It is a lifetime mortgage scheme where you can benefit from having a poor health record.
• Released funds can assist with home modifications if health issues are mobility related.
• An enhanced drawdown lifetime mortgage option is available, allowing you to withdraw funds in stages.
• You don’t need a medical.
• Even after taking the maximum enhancement, you are protected by a 'no negative equity guarantee'.
• The health and lifestyle questionnaire you will be asked to complete is simple and straightforward.

What are the disadvantages of enhanced lifetime mortgages?

• Taking the maximum enhanced equity release could leave little or no inheritance.
• Interest rates tend to be higher than on standard lifetime mortgage schemes.
• Enhanced equity release plans could take longer to set up if a doctor’s report is required.
• Taking a larger lump sum could affect entitlement to certain means-tested benefits.
• Early repayment charges could be levied if plans are settled earlier than intended.

Which companies offer enhanced lifetime mortgages?

Lifetime mortgage companies specialising in enhanced equity release schemes are Aviva, More2Life and Just Retirement. All these companies can offer higher maximum lump sums than their standard terms.

There are some variations of this:
• Aviva’s Lifestyle Flexi plan will offer a lower interest rate if the maximum amount isn’t required.
• More2Life offers an enhanced drawdown facility with an increased cash reserve for future use.
• Just Retirement offers a more detailed Lifestyle Questionnaire which uses conditions other plans don’t cite.

Confirmation of any impairment will usually be checked by the lender writing to the applicant’s doctor for a medical report following an application submission.

Please be advised that some equity release lenders may randomly request a nicotine test should a smoking status be indicated on the health and lifestyle questionnaire.

These are lifetime mortgages offering impaired health options. To understand their features, benefits and risks, please contact Equity Release Supermarket for a personalised, key facts Illustration. All ill-health quotations are tailored to your own medical circumstances and you are under no obligation to proceed.

Who will benefit from an enhanced lifetime mortgage?

Due to the potential increase in loan size, homeowners who still find standard maximum lump sum schemes fall short of their requirements, should consider enhancing their plan.

Enhancement may provide that extra lump sum needed to clear an existing mortgage, loan or credit card debts. Alternatively, if you are searching for the lowest interest rate available, health and lifestyle should also be considered, as the lender may reduce their base interest rate even further.