Equity release mortgages are varying as people’s needs are different. Usually you would just visit the normal equity release schemes which would either be a type of lifetime mortgage or a home reversion scheme. However, there is a fresher type of equity release called the enhanced lifetime mortgage. This lifetime mortgage can provide an even greater maximum lump sum that doesn’t require you losing ownership of your home like in a home reversion plan.
You generally consider an enhanced lifetime loan if you are in poor health or such that is deemed to be eligible due to smoking or excessively drinking. New applicants to this lifetime mortgage find it appealing due to their poor health. This is because lenders believe that you will die sooner than people applying for a normal equity release so they can recoup their money sooner. Therefore, you would receive a higher lump sum with this scheme, meaning that you can enjoy life without any monetary restrictions.
To apply for an enhanced lifetime mortgage you need to be at least 55. There is an application to fill out that asks specific questions about your health and lifestyle. This application looks at lifestyle choices such as smoking and drinking that can be dangers to your health. The application also asks your weight to see if there are obesity or heart concerns. The provider will take into consideration if the applicant has a severe health issue like cancer or other life threatening diseases. This is due to the fact that with a decreased life expectancy of people with illnesses, the provider will release more equity.
There are three main providers of an enhanced equity release scheme: Aviva, More2life and Partnership. You should look at approaching these companies if you are looking to borrow and you suffer from minor or severe health impairments. Alternatively, you should speak to a financial advisor to see if you are eligible for an enhanced equity release scheme.
The enhanced equity release scheme is often overlooked by applicants, because they are not as promoted as normal lifetime mortgages but companies like Aviva or More2Life are becoming more popular with this product. Also, applicants fear that because of their health that they would have the opposite effect in the amount of cash they will receive for their equity.
Enhanced schemes are not for everyone. As stated, there needs to be a significant health risk to your life expectancy for you to qualify. If you speak with one of the providers available to you and feel this scheme is not for you, do not give up. There is monetary help out there for you. You may want to speak with a financial advisor to see what other plans you might be eligible for.
Highlights of Enhanced Lifetime Mortgages:
1) You do not sell your home to obtain cash.
2) The cash you receive in a lump sum payment can be used as you wish.
3) You will not have to pay any monthly payments or interest with this mortgage option.
4) It is for individuals who have severe health issues or potentially reduce life expectancy.
5) There is a potential for leaving an inheritance.
1) Your family will need to pay the mortgage back. This may be through the sale of your home. If there is a sale needed your family may still get an inheritance based on the housing value increase of your home. The sale price minus the outstanding loan balance with interest may equal extra funds.
2) If you have a companion, partner, or are married you may be leaving your partner without extra funds for their retirement by taking out equity when you are at an earlier age.
Enhanced equity release schemes allow you to take money out when you are 55, but there can still be quite a few years left for your spouse or even you should medical changes occur. One major benefit of the enhanced plan is having the funds to cover extra medical expenses that may not be a part of NHS, such as cancer treatments that are not covered under your UK government programme.
Applicants also have a tendency to keep health problems secret, which is understandable. In the case of enhanced lifetime mortgage the sicker you actually are the more you can receive for your equity. Companies should be making potential customers more aware that this option is actually available to them and applicants should not shy away from disclosing any health issues.