Qualification Rules for an Enhanced Lifetime Mortgage
An enhanced lifetime mortgage is a type of lifetime mortgage designed for those who have health issues, due to an ‘impaired lifestyle’ or illness. The terms of an enhanced lifetime mortgage are generally different from a regular lifetime mortgage in that they are more generous, and allow for higher borrowing.
An enhanced lifetime mortgage is much like an impaired or enhanced annuity. This type of lifetime mortgage can be suitable for those who need to borrow more to meet their care costs, or cost of health care, or for those who do not have much time left and want to maximise their borrowing for certain expenses.
So how can equity release providers allow for more generous terms of lending for impaired applicants? To put it bluntly, this is because enhanced lifetime mortgage clients have a shorter life expectancy, which means a shorter expected loan term and therefore fewer risks for the provider. By this rationale, the more serious the health and lifestyle risks, the more money you can borrow through an enhanced lifetime mortgage.
Availability of an impaired or enhanced lifetime mortgage is based on certain specific eligibility criteria. Providers work out eligibility based on a set of questions that determine the level of health and describe the lifestyle of an individual. Applicants are required to fill in a questionnaire at the time of application, which consists of simple health and lifestyle related questions.
Some examples of health and lifestyle questions are – what is your weight and height in order to ascertain BMI (Body Mass Index)? Do you smoke, and if so, what type of cigarettes, for how long and how many a day? Certain chronic illnesses are included in the list of eligibility criteria for enhanced lifetime mortgages, including diabetes, Parkinson’s disease, cancer, angina, stroke, high blood pressure etc.
There are currently four equity release providers offering enhanced lifetime mortgages – Aviva, Just Retirement, Partnership and More2Life. Providers assess the eligibility of applicants based on a health & lifestyle questionnaire, and some providers may also need a doctor’s report to verify certain medical conditions. Although at the moment, More2Life and Partnership only check a sample number of cases, whilst Aviva & Just Retirement do check 100% of all enhanced lifetime mortgage applications.
Diversification is sure to follow in this market. The early days of the enhanced lifetime mortgage provided a simple concept of the single lump sum equity release. More2life have taken that one step further and now introduced the drawdown principle to its enhanced mortgage range. This has created a new purpose for considering an enhanced equity release scheme.
Whereas before the reason was to take the maximum lump sum initially, more2life’s enhanced lifetime mortgage plan re-addresses this train of thought. Now someone can obtain lending on the enhanced level, but without taking the whole lump sum from day one. Instead they could take anything above the minimum amount of £15,000, but leave the remainder in reserve for a later date. An enhanced facility, but with drawdown capabilities.
You can compare the enhanced lifetime mortgage plans from these providers on an enhanced equity release website. Once you complete the set of questions on the providers’ websites and submit the information online, their enhanced equity release calculations will be able work out whether or not you would qualify for an enhanced lifetime mortgage and if so, what maximum amount you may be eligible to borrow through each plan.
For further details or a quote on the range of enhanced lifetime mortgage plans call 0800 028 1933 today.
The content of this website surrounds the concept of Enhanced Lifetime Mortgages. To understand their risks and features, please request your own personalised illustration.