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What is an enhanced lifetime mortgage?

You may be eligible for an enhanced lifetime mortgage, that allows you to release more money from your home, if you or your partner have certain health conditions.

Sometimes referred to as an impaired lifetime mortgage, these plans take your health and various lifestyle choices into account.

If you qualify for an enhanced lifetime mortgage you may be able to borrow more money or take out a plan at a lower rate of interest. Basically, the poorer your health, the more money you could release.

You can release equity from your home as a lump sum or draw it down as and when you need it.

How does an enhanced lifetime mortgage work?

The most important factor of a lifetime mortgage is the age of the applicants. The younger an applicant is, the longer their life expectancy. This is why we ask for the age of the youngest applicant, as the maximum loan to values and interest rates for the different plans are based on how long the lifetime mortgage facility could run for.

The different plans available, the loan to values they offer, together with the interest rate, are based on what the number crunchers have determined as our average life expectancy.

If the number crunchers suddenly said that they have miscalculated and we were all going to live longer than they had calculated, the plans would change and the loan to values will drop.

Similarly if they announced they were wrong and we were going to die sooner, the loan to values would increase.

Based on this, there is a group of people who are very overweight, smoke, have illnesses such as diabetes, Parkinson’s disease, cancer, and other mild to serious health conditions, who’s life expectancy is below average.

For people who qualify or are considered to be in this group, there are some different equity release plans, known as ‘enhanced plans’ that raise the loan to value.

Am I eligible for an enhanced lifetime mortgage?

You won’t need to undertake a medical to apply for an enhanced lifetime mortgage, you will just need to complete a questionnaire. In some cases, additional information will be requested from your GP. If you are a smoker there may be a requirement for you to undertake a test.

What health and lifestyle questions will the lender ask?

Most lender’s questionnaires will be simple to answer and will ask you questions such as:

  • Do you smoke?
  • What is your body mass index? – Or they may ask your height and weight
  • Do you have high blood pressure?
  • Do you suffer from diabetes?
  • Have you ever had health conditions such as cancer, a stroke, a heart attack or angina?
  • Do you have multiple sclerosis or Parkinson’s disease?
  • Have you retired early due to ill health?
  • What medications are you on?

Your GP may be asked to provide additional information so that the Lender has a clear understanding of your state of health. This means that we can then arrange the best available lifetime mortgage for you.

How is an enhanced lifetime mortgage calculated?

All lifetime mortgages are calculated based on the age of the youngest applicant and the valuation of your home. Where one of the applicants has a health issue a further calculation will be done to assess the amount of equity that can be released.

This will be based on your response to the questions on the health and lifestyle questionnaire.

The amount of enhancement applied to the lifetime mortgage will depend upon the severity and number of health conditions that you have. This will vary between lenders, who will base their calculations on their estimated life expectancy of the applicants.

What are the advantages of an enhanced lifetime mortgage?

  • In addition to all the benefits of a standard lifetime mortgage, you will be able to pull down a larger sum or qualify for a lower rate of interest.
  • Under an enhanced mortgage the lender will treat you as if you were older, which can substantially increase the amount of funds that you can release. The younger you are the greater the impact could be.
  • You still retain ownership of your own home.
  • The ‘no negative equity guarantee’ on all our plans means that you are never at risk of owing more than your house is worth, even if you take out the maximum enhanced plan.
  • Checking if you are eligible is very simple. There are no medicals to attend, it’s just a questionnaire, with some further information obtained from your GP.
  • Those who have the poorest health can draw down the largest amount.

Are there any disadvantages to an enhanced lifetime mortgage?

  • You may be left with little to pass on to your beneficiaries if you take out the maximum equity release plan.
  • The rate of interest may be higher than on a standard plan.
  • Your entitlement to certain means tested benefits could be affected if you take a larger lump sum payment.
  • It may be slower to arrange than a standard lifetime mortgage if a doctor’s report is needed.

What can I use an enhanced lifetime mortgage for?

  • Modifications to your home to enable you to remain living there
  • Meeting the cost of future medical treatments
  • Reducing your monthly outgoings by clearing your mortgage and other credit facilities
  • Enabling you to enjoy your retirement whist your state of health allows you to, for example taking additional holidays

How can KIS Finance help?

At KIS Finance we will take the time to get to know you and understand your circumstances and requirements.

Using our experience and market knowledge, we will then provide you with information on the best options available to you to meet your needs.

We will support you through the whole process and will encourage you to involve your family in any discussions and keep them informed on the decisions that you make.