Do I Qualify for Enhanced Equity Release?
There can be a fine line between standard Lifetime Mortgage schemes and Impaired or Enhanced Lifetime Mortgages.
Here at EnhancedLifetimeMortgage.co.uk we ascertain whether you could be eligible for an enhanced equity release plan, what providers deem as variables to life expectancy and how much you can expect to receive from enhanced equity release schemes.
Firstly, what is an enhanced lifetime mortgage scheme?
Simply, an enhanced lifetime mortgage is a conventional lifetime mortgage scheme which is tailored to take into account your: –
- Health record
- Lifestyle you lead
- Age(s) of the applicant
- Your property valuation
Depending on the severity of your health conditions, enhanced lifetime mortgage lenders will actuarially calculate how much more of a lump sum they would offer than a normal equity release scheme.
To recall, a lifetime mortgage is an equity release scheme where you release a tax-free lump sum from your property. The equity release company will consider your age & property value & then calculate a percentage loan-to-value you can release. The older one gets, the greater the amount the equity release providers will lend. This is down to life expectancy.
You retain 100% ownership of your property and continue to live there for the rest of your life. The lender places a first legal charge on your home which is recorded at the land registry.
The capital lump sum released will then be yours to spend as you wish. Thereafter, interest will be charged at a fixed rate by the lender and will compound monthly or annually. NO monthly payments are required by yourself for the remainder of the lifetime mortgage term.
Upon death, or moving into long-term care, the property will then normally be sold in order to repay the lifetime mortgage company. This will be the original amount borrowed, plus accrued interest to the date of repayment. Any money left over will pass into your estate & divided in accordance with your Will.
Lenders do not want to lend too much to early, due to the roll-up effect of the interest and life expectancy. By limiting the release in the early years protects the amount that could be potentially left in the future. The formula is the older one gets, the less time actuarially the plan has to roll-up.
Of the enhanced equity release schemes currently available, the youngest age for qualification is 55. Your property value should be a minimum of £75,000 and be situated in England, Scotland, Wales or Northern Ireland. You must have little or no mortgage, or it must be repaid before the commencement of the new equity release scheme.
On application, you would need to complete a series of health questions which will help determine the maximum enhanced lump sum you could release. The lifestyle questionnaire is a simple form requiring ‘yes/no’ answers.
The greater the severity of the illnesses, the larger amount each equity release company would lend. The theory being that if health is severely impaired, the shorter life expectancy would be. Crude in concept, but a benefit to those concerned.
How Much Can I Borrow On An Enhanced Lifetime Mortgage Plan?
Here we compare the difference between standard equity release lending and those of an enhanced lifetime mortgage scheme.
Case Study 1
Jack is healthy male aged 65 with a property value of £250,000 & would be able to release a maximum of 30% of the property value. This would amount to £75,000 on the Just Lump Sum Plus Plan as these are standard equity release terms.
Case Study 2
Frank is also age 65 with a property value of £250,000. However, Frank is a smoker, had a heart attack 3 years ago and now has high blood pressure which requires ongoing prescribed medication. Upon confirmation of his medical records from his doctor, he was able to up to a maximum of £96,250 on the Aviva Lifestyle Enhanced Lifetime Mortgage Plan.
As you can see, Frank was able to release an extra £21,250 by taking advantage of the enhanced lifetime mortgage plans on offer.
Where to obtain impaired equity release advice
EnhancedLifetimeMortgage.co.uk has teamed up with specialist nationwide equity release brokers who can source & provide the best plans for your personal circumstances.
Call 0800 028 1933 or complete this link to the contact form to request further details.
These are lifetime mortgages. To understand their features and risks, always ask for a personalised illustration.