A Lifetime Mortgage Which Takes Your Health into Account
The latest innovation in the equity release industry has been the ‘enhanced’ or ‘impaired’ lifetime mortgage scheme which is aimed at those who are looking to withdraw as much equity as possible from their property. By completing a health & lifestyle questionnaire, the home equity lenders will assess the medical condition of each applicant in order to underwrite the case. Therefore, should a history of adverse health be evident then the enhanced mortgage provider can offer superior terms than otherwise be on a standard equity release plan.
In practice, and similar in principle to an enhanced annuity, the underwriters will determine how severe the person’s health is and rate it accordingly. The lender can therefore offer a greater amount of cash, as medically the applicant would be assumed to have a shorter life expectancy. The lenders safeguard in terms of future balance is that the lifetime mortgage will not have as long to roll-up over. In essence, the more adverse one’s health, the greater the potential lump sum will be.
Currently, this market is still in its infancy and we have four impaired equity release providers: –
- Aviva – based on their lump sum max product, Aviva will consider someone’s health situation upon completion of a health & lifestyle questionnaire. Slightly more medical details are requested than both Partnership & more2life and criteria is more strict as to whether impairment has qualified for the greater lump sum. Aviva offer a maximum of 4% extra on the loan-to-value amount for any impairment they feel qualifies.
- more2life – funded by Partnership & administered by Key Retirement Solutions, more2life offer a more simplified underwriting approach than both Aviva & Just Retirement. Uniquely, more2life offer a drawdown version of the enhanced lifetime mortgage. Therefore, you can create a larger cash facility due to the impairment, however you do not have to take all the funds at once. Drawdown will allow you to take the enhanced cash facility in stages which provides for greater flexibility and inheritance protection over the longer term.
- Just Retirement – the latest company to enter the enhanced equity release market. Just Retirement are one of the largest enhanced annuities companies & therefore have a tradition of understanding health related issues with regards to financial products. They offer a comprehensive underwriting approach which takes more illnesses into account than any of the other providers.
- Partnership – the original enhanced lifetime mortgage provider and also having experience of impaired annuities, partnership offer the same health & lifestyle questionnaire than more2life. By answering a series of ‘yes & no’ answers, Partnership will assess impairment under these set of questions. A simple ‘yes’ to the question – ‘Are you taking any prescription medication? can assist in obtaining an increase to the maximum lump sum. Offering a ‘fees free’ product, Partnership currently charge no valuation fee, no application fee & are currently giving away £500 upon completion of the scheme, which effectively could cover any solicitors fees.
Where can I get advice or an enhanced lifetime mortgage quote?
Further information on other types of lifetime mortgages: –
These are UK enhanced lifetime mortgage plans. To understand the features and risks ask for a personalised Key Facts Illustration.