Head of Content
Mortgage Advisor & Director
What is an enhanced lifetime mortgage?
Enhanced lifetime mortgages are a kind of equity release plan that uses your personal health records to set lending criteria.
An enhanced lifetime mortgage might be the answer if you've struggled with health problems and you're searching for the maximum equity release from your property or a potentially lower interest rate.
Typically, these plans will allow for more money to be released, dependent on your responses to a health and lifestyle questionnaire.
To put it another way, with an enhanced lifetime mortgage, the worse your health is, the more you can borrow.
With an enhanced lifetime mortgage, how does a lender determine the maximum I can borrow?
Lenders offering enhanced lifetime mortgages will typically use information from your medical records to set the maximum amount you can borrow.
This is because it's based on your health and lifestyle.
By asking you questions about your health and lifestyle, lenders can build up a profile on your physical health and what kind of risk level you pose.
When taking out a lifetime mortgage, an enhanced lifetime mortgage provider will use an assessment to set the maximum amount that can be borrowed. This is based on your current health and whether or not this is expected to deteriorate in the future.
As with all lifetime mortgages, the amount you can borrow will also depend on the value of your property and how much equity there is.
What type of questions will I be asked?
Enhanced lifetime mortgage providers will usually ask you about your medical history and lifestyle to determine the amount that can be borrowed against your property.
The following questions will be addressed in a simple health and lifestyle survey:
- If you are a smoker
- If you have been diagnosed with diabetes
- If you have any heart problems such as angina
- If you've suffered from a heart attack, stroke, or cancer
- Your body mass index (BMI)
- If you suffer from high blood pressure
- Whether you have a condition such as Multiple sclerosis or Parkinson's disease
- If your health caused you to retire early
This list is not intended to be all-inclusive, and if you have additional health or lifestyle concerns that are more serious, it's possible you'll receive a larger amount of money as a result of your equity release.
Who is eligible for an enhanced lifetime mortgage?
It all depends on the type of health problems disclosed in your medical records if you want an enhanced lifetime mortgage.
This is because the lender applies underwriting criteria based on the assumption that if you have been sick, your life expectancy will be decreased.
Who would benefit from an enhanced lifetime mortgage?
If you suffer from health problems or have previous medical conditions, an enhanced lifetime mortgage could be a good choice as you could be offered larger lump sums with lower interest rates.
If you suffer from smoking-related illnesses, cancer, heart disease, respiratory problems or other lifestyle issues that may affect your life expectancy, this could be the best option for you to release equity from your home.
Benefits of enhanced lifetime mortgages
There are several benefits to getting an enhanced lifetime mortgage, such as:
- Larger lump sum payments, relative to other types of equity release plans
- With an approved equity release lender, you are protected with a no negative equity guarantee - even with the maximum lump sum payment.
- Drawdown options are available, meaning that you can spread the payments over time.
- The funds released can help towards medical bills, home adjustments, or any other costs that may be associated with your health problems.
Downsides of enhanced lifetime mortgages
There are a few basic considerations for this type of plan:
- You must complete a health and lifestyle questionnaire.
- The lender may review your medical records to determine if you qualify for an enhanced lifetime mortgage.
- If you're under the age of 55, there is no guarantee that the lender will approve your request.
- Taking on a larger equity release will reduce the amount of inheritance you can leave your heirs.
Get your mortgage in principle certificate in 5 minutes
What should I consider before applying?
Before applying for an enhanced lifetime mortgage, take the time to answer the questions below. These will help you determine whether or not an equity release plan is right for your needs:
- Do you need larger lump sum payments than what would be allowed with other types of equity release plans?
- Is downsizing an option?
- How much equity do you have in your home?
- Do you need the money for home improvements?
- Are there any alternatives to an enhanced lifetime mortgage?
- Will taking on a lifetime mortgage affect your means-tested benefits?
- Do you have an outstanding mortgage to consider?
- Will taking out a lifetime mortgage leave your family with little or no inheritance?
How can I find out more about an enhanced lifetime mortgage?
Equity release mortgages are a serious financial decision, and there are many aspects to consider before signing any contract.
If you're interested in learning more, we would recommend engaging an experienced mortgage broker such as our team at Teito.
Alternative options to lifetime mortgages
You might also want to consider other financial options, such as downsizing to a smaller home, taking out a personal loan or using savings.
If you don't meet the criteria for an enhanced lifetime mortgage, there are a few other equity release plans that may be available to you, such as a home reversion plan.
About the Equity Release Council
The Equity Release Council is an association that represents members of the equity release industry in the United Kingdom. It provides information on lifetime mortgages, home reversion plans and other similar options.
It is crucial that any lifetime mortgage provider, or other equity release mortgage provider you consider, is approved by the Equity Release Council. This means that they will operate within their code of practice and offer protection with a no negative equity guarantee.
What does a lifetime mortgage cost?
Interest rates on a lifetime mortgage can vary depending on a number of factors, including your age and how much equity you want to release. Some lenders also charge an application fee for taking out a lifetime mortgage.
Interest rates can be lower than with other types of equity release, but you should aim to have a clear idea of how much your lifetime mortgage will cost before applying for one.
There are also other fees associated with taking out a lifetime mortgage, such as a valuation fee and legal fees or account management fees. You will also need to ensure you have suitable house insurance under an equity release arrangement.
The equity release mortgage will not be paid off until the house is sold, you move into long term care, or you pass away.
If you're interested in an enhanced lifetime mortgage, please get in touch with our team of specialists.
Apply for an enhanced lifetime mortgage now
Contact our dedicated team of advisers today for more information on how an enhanced lifetime mortgage or another form of equity release could benefit you. Equity release schemes can be complicated, so it's crucial to find the right kind of help.
To find out more about an enhanced lifetime mortgage, our team can help you understand if you meet all criteria set by the equity release lender.
We'll also answer any questions you might have about how getting a lifetime mortgage will affect your other finances - such as benefits and inheritance.
Get started now, and we promise to make the process easy from start to finish!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.