Frequently Asked Questions
How Much Can I Borrow?
The amount any enhanced lifetime mortgage lender will release is based on the following criteria: –
- Your age(s) – Should there be a joint application, then the age of the youngest homeowner has the greatest bearing on the maximum release.
- Property valuation – upon application a local surveyor will be appointed to value your property. The valuation will be based on current market conditions & what the valuer could expect as a reasonably quick sale.
- An assessment of your health & lifestyle – by answering a series of lifestyle questions regards your health, your lifetime mortgage company will then determine how much you can borrow. The more questions answered ‘yes’, the greater the lump sum made available. On joint applications, the overriding factor affecting the impairment is the health of the youngest applicant.
To calculate the maximum amount you could borrow based on worst case scenario, use our enhanced lifetime mortgage calculator.
How Is My Health Assessed?
A simple lifestyle questionnaire is completed in association with the application form. Each lender has its own health questionnaire, however they are very much similar in practice. These questions are covered in the lifestyle questionnaire page.
The questionnaire will help the equity release provider assess your health conditions. The worse health one has, the greater the lump sum that will be offered. This can be the only time when ill-health can be an advantage financially!
Will I Need A Medical Examination?
The simple answer is that NO medical examination will be required.
However, your enhanced lifetime mortgage company may request a medical report from your GP. This will be at the expense of the lender and can influence the speed of the application process dependent on the promptness of your doctor replying.
Each lender has its own set of criteria. For instance Aviva will request a medical report on 100% of all enhanced cases. However, more2life & Partnership are less stringent with their requests.
How Long Does An Application Take?
In principle, an impaired life equity release plan should take the same amount of time as any lifetime mortgage application. The standard for this should be between 6-8 weeks. However the difference between the two variable schemes is how the enhanced lender will treat the response to the lifestyle questionnaire.
Therefore, if a medical practitioners report is required, this will invariably delay the process longer than normal. It is always therefore advisable to pre-empt your doctor should a medical report have been requested to help hasten matters.
As Aviva conduct 100% medical checks you would expect them to be the longest in processing timescales. However, this is not always the case as they have more efficient application strategies than the other two lenders which can balance matters out.
What Are The Set Up Costs?
They are the same as any normal equity release scheme and are as follows: –
Firstly, there is the valuation fee which is charged in accordance with your property valuation. The good news here is that currently, EnhancedLifetimeMortgage.co.uk have access to ALL 4 lenders & can obtain FREE valuations on your behalf for each scheme. This will mean no upfront fees would be necessary.
Secondly, you would normally pay an application fee to the lender upon completion of the lifetime mortgage. These can vary between the three lenders and start from as little as £0 and go upto £695. This fee can usually be deducted from your release on completion or added to the amount borrowed. Contact us on 0800 028 1933 to request your personalised illustration.
Thirdly, you will require a solicitor to act on your behalf. Their fees again can vary, however the solicitors we could recommend would be members of ERSA (Equity Release Solicitors Alliance) who specialise in such matters. Having negotiated with members of this association, we are able to obtain a fixed fee agreement with these solicitors, starting from £395 +VAT & disbursements.
Finally, your adviser may charge for the advice they provide which includes the processing of your application and covers the liaison between lender, solicitor & yourself to provide a smooth application process.
Can I Top-Up In The Future?
Most lenders will allow you to review the amount you can borrow at any point in the future. However, the amount you take from the enhanced scheme initially will have the biggest influence on whether you can do further borrowing.
Some enhanced equity release schemes have a drawdown facility automatically provided, should the maximum release not be taken initially. Having a combination of enhancement & drawdown, provides those with ill-health a chance of setting aside extra funds that will be available in the future, should additional funds be required.
Lenders will usually impose minimum top-up levels which can vary between £5,000 – £10,000. If a maximum release has been taken from day 1, then usually the only way additional borrowing would occur is if the combination of getting older & hopefully property values increase over time.
Bear in mind that any further advances may be at a different rate of interest than the initial tranche of money taken. Therefore, seek independent equity release advice before you commit.
Where Can I Find An Equity Release Solicitor?
You will need a solicitor to carry out the legal work on your behalf. Under Equity Release Council (ERC) standards you must have a separate legal firm to those of the lender.
The best way of finding a solicitor that specialises in equity release is to visit the ERSA website where a directory of suitable legal firms are present.
Alternatively, we can advise on arrange of solicitors with expertise in the field of equity release & have negotiated competitive deals on your behalf. Contact us on 0800 028 1933 for further details.
What Are The Early Repayment Charges?
Any lifetime mortgage is designed to run for the whole of one’s life, until death or moving into long-term care. If you decide to repay your equity release mortgage early then you may incur substantial early repayment charges.
The reason for the penalty is that the lifetime mortgage lender will incur costs in setting up the scheme & also any potential future fall in long-term gilt rates. The variation on the penalty will be determined by how much the gilt rate has fallen since inception of the plan.
The early repayment charge covering all the impaired lifetime mortgages is 25% of the of the amount borrowed. Any Key Facts Illustration provided by your equity release adviser will cover this in greater detail.
Can I Still Move Home?
All equity release schemes that we are associated with are members of the Equity Release Council (ERC) & regulated by the Financial Conduct Authority (FCA).
Therefore, all schemes follow the rules laid down by both organisations. Under the FCA, all lenders must allow the equity release client to have the option of transferring their scheme to another property that meets their lending criteria. This must be completed without the equity release customer incurring any penalty.
What Function has The equity Release Council?
The Equity Release Council provides a code of conduct that all lenders must adhere to. The Equity Release Council took over from the dissolution of SHIP (Safe Home Income Plans). These principles include:
- The ability to move house and allow customers the right to move their plan to another qualifying property with no financial penalties
- The lenders must allow equity release planholders the ability to remain in their property for the rest of their life
- Allow the customer to have their own independent legal adviser that can conduct the conveyancing for them. This solicitor will sign a SHIP certificate to confirm they have represented the client & received legal advice and are fully aware of the implications on their estate.
- Have a No Negative Equity Guarantee included in their lifetime mortgage plan. This will provide the guarantee that no matter what, the equity release balance can never end up more than the value of the property.
- the option to allow customers the right to move their lifetime mortgage to another qualifying property without financial penalty
Who Owns My Property If I Release Equity?
With any lifetime mortgage scheme you retain 100% ownership of the property. It’s only a home reversion plan whereby ownership is transferred to the lender.
Like any conventional mortgage take out prior to retirement, the mortgagee (lender) registers a first legal charge at the land registry. This ensures that the lender receives their proceeds from when the house is eventually sold.
Is Enhanced Equity Release Available On A Drawdown Basis?
Yes. This means that for those who require the maximum equity release facility, but do not require all the funds immediately then an enhanced drawdown lifetime mortgage scheme would be the ideal solution. The more2life enhanced lifetime mortgage plan is the only current impaired equity release scheme that can offer this facility. Click here for further details.
Remember however, that not all drawdown reserve facilities are guaranteed and can be withdrawn by the lender under certain severe financial circumstances.
How Do I Repay An Equity Release Scheme?
Equity release schemes are designed to run for the rest of your life and eventually repaid upon the death of the last surviving partner, or them moving into long-term care. At that point the lender will usually provide a window of 12 months for the scheme to be repaid.
This will usually from the sale of the property. The proceeds would therefore be used primarily to repay the lender, with any surplus passing into the estate of the deceased.
The equity release mortgage could be repaid earlier should sale arise or inheritance be received. However, should an equity release scheme be repaid before death or long-term care, then an early repayment charge could apply.
Where Do I Apply for an Enhanced Lifetime Mortgage?
Firstly, its important that you receive advice from an equity release expert who has the experience & qualifications to advise on enhanced lifetime mortgage schemes. This type of impaired lifetime plans can make all the difference to whether someone can repay a mortgage, help their children or consolidate pressing debts. Therefore, its essential that all aspects of your finances & health are ascertained in order to provide best advice.
An enhanced lifetime mortgage adviser can be found by contacting ourselves by completing the contact form on this website. Using our relationships with the major equity release brokers, we can put you in touch with such a specialist. They will then conduct a thorough factfind & glean from you your current situation financially, your objectives & then put forth a recommendation based on this data.
Following your approval of the enhanced recommendations, your adviser can then lead you through the enhanced equity release application process which is, by its nature, a more involved health related questionnaire. There also maybe doctors records required, thus its important your adviser knows the in and outs of each company concerned with the impaired equity release journey to completion.
If you are unsure what your next steps are, then please contact us on 0800 028 1933 for further details.