Does an Enhanced Lifetime Mortgage Calculator UK Exist?
So what do equity release calculators do, and is there such a thing as an enhanced lifetime mortgage calculator UK?
Until a few years ago, a lifetime mortgage calculator was quite a novel application, only offered by a few select websites that allowed users to quickly calculate how much their equity release plan would endear them with as a tax-free cash lump sum. Today of course, there is no shortage of lifetime mortgage calculators on the internet, as most mortgage comparison and advice websites offer this useful application to users.
The next stage in the evolution of lifetime mortgage calculator was the introduction of the enhanced lifetime mortgage calculator on the internet. Of the four equity release companies that offer enhanced lifetime mortgages, (Aviva, Just Retirement, more2life & Partnership) an accurate enhanced calculator will pull the maximum release from each of these schemes & display these results.
An enhanced lifetime mortgage plan is basically a type of loan that allows you to access the equity tied up into your home, but takes your state of health into account. The mortgage is repaid when the property is sold, when the term of the plan ends, which is usually after you die or have moved into permanent care. At that stage, your beneficiaries will usually have 12 months to repay the lender, which invariably will come from the sale proceeds of the property.
There are different types of enhanced lifetime mortgage schemes UK, each with different lending and repayment criteria. Add to this the fact that each variable, including the applicant’s age, the value of the property, the amount needed to be released etc. determines how the loan is underwritten. The overriding factor with regards to the maximum enhanced release being possible is the severity of the health records. Basically, by completing a health & lifestyle questionnaire and answering the questions therein, will determine the effect it will have on the maximum equity release.
An enhanced lifetime mortgage calculator takes into account the type of equity release scheme, the lending terms of the particular provider, as well as the applicants’ variables such as age, property value, health and loan amount etc. to calculate how much the plan will cost.
An enhanced lifetime mortgage UK plan is different from a regular equity release scheme in that it has more generous terms of lending, based on certain special circumstances related to the life expectancy of the applicant. When it comes to a loan, the shorter the term of the loan, the lower is the risk for the lender. As such, in circumstances where the applicant has compromised health, a chronic illness, or a lifestyle that impinges on their life expectancy, lenders are able to lend at more generous terms.
In addition to offering the regular lifetime mortgage calculator, some equity release comparison websites also have the enhanced lifetime mortgage calculator. For instance, Equity Release Supermarket offers users the choice to get a quote for enhanced lifetime mortgage based on additional relevant information.
So why does an enhanced lifetime mortgage calculator UK need additional information? Because this is the information that it uses to project the expected term of the loan, which in turn determines the figures. The additional information is usually a simple health & lifestyle questionnaire with questions about your age, any serious illnesses, and any chronic health conditions you may suffer from.
The lifestyle questionnaire is used to find out whether any impairment one has will be acceptable to the lifetime mortgage companies to form the basis of any enhanced terms. These impairments or lifestyle choices that help qualify for the enhancements are as follows: –
- You height, weight & for some lenders your body mass index (BMI)
- Whether you smoke any form of tobacco e.g. 10 cigarettes per day for the last 10 years
- Diagnosed with high blood pressure which needs medication
- Entered hospital due to a heart attack, stroke or suffer from related illnesses such as angina
- Struggle with diabetes requiring medication or even insulin
- Diagnosed with cancer needing therapy (excludes certain skin related cancers)
- Diagnosed with Parkinson’s disease or multiple sclerosis
Just retiring on the grounds of poor health can get you an enhancement or even the fact that you are taking prescription medication e.g. aspirin can help.
Therefore, similar to the underwriting of enhanced annuities, the equity release market has also embraced the more in-depth knowledge our insurance companies have in associating ill-health with financial products; equity release now being the latest.
But do not fear as there are websites that can help guide you to the relevant companies & tools you can employ that will provide you with the enhanced calculations to inform you of the difference any enhancement can make to the tax-free lump sum.