A Guide to an Enhanced Lifetime Mortgage

Today, anyone considering a lifetime mortgage to help with their finances may see providers offering an ‘enhanced’ variation of the equity release plan. Prospective borrowers may wonder what this versions of the scheme entails, whether they qualify, and the benefits.

This article explains everything you need to know about an enhanced lifetime mortgage.

What is an Enhanced Lifetime Mortgage?

An enhanced lifetime mortgage is an equity release plan deriving from the standard lifetime mortgage, addressing those with exceptional circumstances. These plans cater to the needs of those with general health issues, including long-term medical conditions and, in some cases, terminal illnesses.

The defining feature of an enhanced lifetime mortgage is that the plan allows homeowners to take out more equity from their property with lower interest rates in repayments. The applicant could receive more than 60% of the home equity most providers will offer.

The enhanced lifetime mortgage is a plan that bases its features on the idea that those in poor health will have a shorter lifespan than the standard applicant. That means that providers will consider that the debt will more likely get repaid quicker and can offer more money at cheaper interest rates.

Borrowers that suffer from medical ailments may apply for an enhanced lifetime mortgage to help pay for private medical care or other expenses to improve their quality of life. Even if the applicant has a terminal illness, they can be eligible for the equity release plan.

So let’s review the general criteria of a lifetime mortgage.

Criteria of an Enhanced Lifetime Mortgage

Prospective borrowers can generally get considered for an enhanced lifetime mortgage if they have conditions that put them in poor health. Below are the leading criteria that make persons eligible for this particular equity release plan.

• If you’ve retired early because of poor health
• You have a high Body Mass Index (BMI)
• You smoke cigarettes or tobacco regularly.
• You have high blood pressure.
• You have diabetes
• You have Multiple Sclerosis (MS) or Parkinson’s Disease.
• You’ve suffered a heart attack, stroke, or other medical complications.
• You have a cancer diagnosis requiring long-term treatment

As mentioned above, the general qualification criteria for an enhanced lifetime mortgage mean that you may have a shorter lifespan due to health conditions. We’ll outline the qualification process further down in the article.

But if you believe you’re eligible for an enhanced lifetime mortgage, how do the plans work?

How Does an Enhanced Lifetime Mortgage Work?

Should you have a diagnosis with a health condition that could shorten your lifespan, you may qualify for an enhanced lifetime mortgage rather than a standard plan. Equity release specialists can provide more information if you aren’t sure whether you meet the criteria.

You’ll apply for the enhanced lifetime mortgage by completing questionnaires similar to the standard application. However, more focus will be on your health. Questions will ask you about the state of your conditions, require information, and possibly request medical records to confirm your diagnosis.

Upon submission, you will get considered for an enhanced lifetime mortgage. If your application succeeds, borrowers will get the following benefits over a standard equity release plan.

Defining Features of an Enhanced Lifetime Mortgage

Borrowers can enjoy the benefits of an enhanced lifetime mortgage that separates this plan from a standard one.

• A significant amount more cash than a standard lifetime mortgage
• Lower interest rates are applied to the balance.
• Options for drawdown facilities related to medical expenses
• A no negative equity guarantee, even with more cash

So with the benefits of unlocking more equity against your home with lower interest rates, how much can you borrow?

How Much Can You Borrow?

How much an applicant can borrow is significantly more than a standard lifetime mortgage. That’s because the lender will judge that there will be quicker repayment of the loan because of a shorter lifespan. Subsequently, they will offer more significant amounts of cash against your home with a lower interest rate.

Many providers will have defined limits as to how much you can borrow. But the enhanced lifetime mortgage plans often will let borrowers unlock over 60% of their home’s value, with those in the poorest health receiving the most.

What’s the Interest Rate on Enhanced Lifetime Mortgages?

Providers will offer interest rates that are generally lower than the standard plans. Most applicants will find their rate between 4% and 7%. In contrast, those who take more money usually find themselves on the higher end of the spectrum.

How Does an Enhanced Lifetime Mortgage Get Paid Back?

Like a standard lifetime mortgage, repayment will come from your property sale after you pass away or move into long-term care. Because an enhanced lifetime mortgage allows borrowers to take a higher loan-to-value (LTV), there may not be much cash left after the property’s sale.

We’ll cover that risk further down the article. Let’s look at how borrowers can qualify for a lifetime mortgage.

How Do You Qualify for an Enhanced Lifetime Mortgage?

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Lenders can vary on their conditions to approve an enhanced lifetime mortgage. They can vary between criteria, such as whether you’ve had a diagnosis for cancer in the last five years or you’ve had the recommendation to retire early from a medical professional.

Because circumstances can vary by provider, speaking to an expert is recommended to get a concise idea of what to expect from an enhanced lifetime mortgage. We’ve listed below the general application process taking qualification factors into account.

Applying for an Enhanced Lifetime Mortgage

Here’s how you can discover if you qualify for an enhanced lifetime mortgage and apply if the criteria get met.

1. Consider your options.

A platform that considers all your information and connects you with the right equity release broker would benefit a prospective borrower. That can make applying for an enhanced lifetime mortgage much smoother than you would yourself.

If you are comfortable sharing your health information and current circumstances, you’ll get a broker dedicated to meeting your needs. They’ll inform you of the potential plans you could get offered and outline all advantages and risks of committing to an enhanced lifetime mortgage.

2. See if you meet the criteria for the plan.

Your broker will use your provided information and present a series of enhanced lifetime mortgage plans suited to your needs. They will then discover if your current condition makes you eligible for your preferred equity release scheme and other secondary options.

3. Choose a suitable lender and apply.

Finally, the broker will help get all your relevant and required documentation together and assist with your application for an enhanced lifetime mortgage. You’ll then apply to your chosen equity release provider for the plan, where it will be under consideration for approval.

Applying for an enhanced lifetime mortgage usually takes around 4 to 6 weeks but can be longer in more complex circumstances. Ask your broker how long the procedure could take if you consider applying for the equity release plan.

Is There an Age Limit for an Enhanced Lifetime Mortgage?

The age limit for an enhanced lifetime mortgage follows the standard plan’s criteria. Applicants must be 55 or over to apply for the equity release scheme.

Do I Need a Medical to Qualify for an Enhanced Lifetime Mortgage?

Lenders will not require applicants to undergo a medical exam for enhanced lifetime mortgage applications. Prospective borrowers will get asked to complete a health questionnaire and likely ask for supporting information from medical professionals to back up their health conditions.

What are the Pros and Cons of an Enhanced Lifetime Mortgage?

Naturally, with all financial products, there are benefits and risks behind the enhanced lifetime mortgage plans. Considering this equity release scheme, you’ll probably want to weigh its pros and cons.

Learn about the advantages and disadvantages of a lifetime mortgage below.

Benefits of Enhanced Lifetime Mortgage

Here are some pros of an enhanced lifetime mortgage for prospective borrowers.

• You can get a considerable amount of cash against your home tax-free without needing to make repayments.
• Repayments only come when you pass away or move into long-term care.
• You can continue living in your home without any risk of being forced out.
• The money received can get spent as you please.
• You’ll get lower interest rates than a standard lifetime mortgage.

So what about the disadvantages an enhanced lifetime mortgage can bring to the table?

Disadvantages of Enhanced Lifetime Mortgage

Here are the critical cons of taking out an enhanced lifetime mortgage.

• Taking out a more significant amount of cash means there may be little or nothing left for an inheritance.
• The plans may take much longer to apply for than standard ones.
• More cash in your estate means your state benefits and tax position can get affected.
• If you want to settle the loan early, there will likely be hefty repayment charges.
• Interest rates may still be higher than conventional mortgages.

Do I Need an Enhanced Lifetime Mortgage?

Suppose you are considering an equity release scheme and have health conditions of concern. In that case, an enhanced lifetime mortgage may be an excellent option for your needs. The first step is to speak to an equity release specialist to understand if this scheme would suit your circumstances.