Find Out How Much Cash You Could Release Today?
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.
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.
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.
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?
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.
Borrowers can enjoy the benefits of an enhanced lifetime mortgage that separates this plan from a standard one.
So with the benefits of unlocking more equity against your home with lower interest rates, 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.
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.
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.
We compare plans from the leading equity release providers
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.
Here’s how you can discover if you qualify for an enhanced lifetime mortgage and apply if the criteria get met.
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.
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.
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.
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.
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.
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.
Here are some pros of an enhanced lifetime mortgage for prospective borrowers.
So what about the disadvantages an enhanced lifetime mortgage can bring to the table?
Here are the critical cons of taking out 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.