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Enhanced Lifetime Mortgages

If you’ve got a health or lifestyle condition that could impact your life expectancy, you may be able to qualify for an enhanced lifetime mortgage. Find out more by reading our guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 16, 2022

Lifetime mortgages give you the chance to release equity that’s built up in your home without needing to downsize, offering a viable way to boost your standard of living in retirement. But what if you’ve got certain health or lifestyle conditions – could you be eligible for an enhanced amount?

This guide will tell you everything you need to know about enhanced lifetime mortgages, how to get one, and how a specialist advisor can help.

What is an enhanced lifetime mortgage and how do they work?

Enhanced lifetime mortgages are a type of equity release scheme which allow qualifying borrowers to benefit from a lower interest rate or higher loan-to-value (LTV), depending on the lender. This means you could raise more capital than with a standard deal.

If you were to secure a lower rate, this could safeguard a higher percentage of your property’s value to pass on to loved ones, as the eventual interest payment would be lower. Just bear in mind that you won’t normally be able to do both.

Enhanced lifetime mortgages are based on the assumption that if you have certain health or lifestyle conditions that affect your life expectancy, the lender will get their capital back quicker and there’ll be more certainty over the property’s future value, so they’ll be willing to offer you a higher amount or more favourable terms in the interim.

A specialist broker will be able to help determine whether you qualify for enhanced equity release, and if it will be the best course of action.

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How much can you borrow?

Although your age and the value of your property will always come into it, the eventual amount you can borrow will depend on the LTV ratio the lender uses – and this will be heavily influenced by the severity of your health condition.

Enhanced lifetime mortgages can offer the chance to secure LTVs around 50% and beyond, much higher than with standard equity release deals, and those with the poorest health will qualify for the highest LTVs and therefore the largest payments. For this reason it’s important to be thorough when filling in the health and lifestyle questionnaire provided by the lender.

Just bear in mind that if you secure a higher LTV and are able to borrow more, you may end up paying more in interest as a result. An enhanced lifetime mortgage advisor will help you decide whether the additional equity released will be worth the cost.

How to get an enhanced lifetime mortgage

If you’re interested in an enhanced lifetime mortgage, there’s some simple steps you can take to make the process much smoother. This is how we’d recommend you do it.

Step one: Speak to a broker

An equity release broker will be able to help you decide if an enhanced lifetime mortgage is right for you and, if so, what you should do next. They’ll help collate the relevant documentation you could need and will make sure you understand the potential risks involved, such as leaving less behind as an inheritance. They’ll often recommend talking with your beneficiaries so everyone is happy with the plan.

Step two: Check if you qualify

Although the criteria can vary according to the lender – we discuss more about eligibility criteria below – you need to make sure that you qualify for an enhanced lifetime deal. Normally, this will simply mean that you need a health or lifestyle factor that puts you at greater risk of a lower life expectancy, such as a serious illness smoking, high blood pressure or heart disease. Your broker will be able to help you determine if you qualify.

Step three: Find the right lender and apply

There aren’t many lenders operating in the enhanced space, which is again why a broker can be invaluable – they’ll know the ones you should approach based on your circumstances, saving you a lot of time and energy.

Once you’ve found the lender to suit it’s time to apply. The application process will involve medical underwriting and you’ll be asked to fill in a simple health and lifestyle questionnaire. If the lender needs more information, you may be asked to provide a full doctor’s report.

The usual mortgage process will apply as well, in that you’ll need a solicitor and the lender will require a property valuation, with various fees you have to pay too. Your broker will be able to talk through all of this with you and guide you accordingly.

If you get in touch we’ll arrange for an equity release specialist, with experience dealing with enhanced lifetime mortgages to contact you directly for a free, no obligation chat.

Which equity release providers offer enhanced lifetime mortgages?

There are currently only a few lenders operating in this space, with three key options being Just, more2life and Aviva.

  • The more2life enhanced lifetime mortgage is offered through their Tailored plan with a maximum loan size of £800,000. A cash facility is available, and partial repayments can also be made.
  • The Aviva enhanced lifetime mortgage is known as the Lifetime Flexible Option, and can offer borrowers the choice of a lower interest rate or higher LTV. There’s no maximum age limit and the maximum loan size is £1m. A cash reserve option is available and partial repayments can be made.
  • The Just For You Lifetime Mortgage is available to applicants up to the age of 85 and offers a maximum loan amount of £1m to borrowers in England, Scotland and Wales or £250,000 in Northern Ireland. It includes a cash facility option, allowing borrowers to release initial amounts in the future after taking the initial lump sum. There’s also the option to make monthly payments to cover some or all of the interest.

Rather than approaching these providers directly, speak to a broker first. They’ll be able to look across the whole market and check for any specific offers not yet available to the general public or deals with reduced overall costs.

Eligibility criteria

Eligibility criteria can vary between providers but the general idea is the same – you need to have certain lifestyle or health conditions that could limit your life expectancy.

What illnesses are covered?

Typical medical conditions that could enhance your lifetime mortgage are:

  • Hypertension (high blood pressure)
  • Diabetes
  • Heart attack
  • Stroke
  • Cancer
  • Multiple sclerosis
  • Parkinson’s disease
  • Dementia
  • Kidney failure
  • Liver disease
  • Motor neuron disease
  • HIV

This list can vary depending on the lender you choose, and they may have different limitations as well. In the case of cancer, for example, some may expect you to have been diagnosed in the last five years, and others may widen their criteria to include anyone who’s been advised by a medical professional to take early retirement due to ill health (though there may be some exclusions involved).

What lifestyle conditions are included?

The two key lifestyle conditions that could make you eligible are smoking and having a high body mass index (BMI), typically over 41. Lenders may have different limits or restrictions on this – for example, you may need to have been smoking at least 10 cigarettes a day for the last 10 years to be classed as a smoker – and you may need to combine these lifestyle factors with other health conditions in order to qualify for enhanced rates.

What about standard eligibility criteria?

You’ll need to meet standard lifetime mortgage criteria as well, such as being aged 55+ and owning a home worth at least the lender’s minimum amount – usually around £70,000, but it can be more – and you should ideally be mortgage-free or only have a small balance remaining. If it’s the latter, you may be expected to clear the balance with the proceeds of equity release.

Things to consider

Knowing whether to opt for equity release with an enhanced lifetime mortgage isn’t always straightforward, so to help you decide, here are a few risks and benefits to consider.

Benefits

  • Being eligible for a larger payment means you’ll have more capital with which to enjoy your retirement.
  • You may be able to use some of the proceeds to make modifications to your home to adapt to your changing health.
  • If you opt for a lower interest rate, your eventual interest payment will be lower.
  • You’ll still have a negative equity guarantee, which means your beneficiaries won’t be facing any debt.
  • Determining your eligibility is straightforward and you won’t normally need to undergo a medical.

Risks

  • Enhancing the amount you can borrow can sometimes result in higher interest rates, leading to higher costs overall.
  • You’ll likely leave less behind to your loved ones.
  • The application process can take longer, particularly if you need to provide a doctor’s report.
  • If you take a lump sum it can impact means-tested benefits.
  • If you change your mind you may have to pay early repayment charges.

What are the alternatives?

If you’re not sure an enhanced lifetime mortgage is right for you, there are several other options to consider. The first is downsizing, letting you free up some equity by moving to a smaller and lower-value property. This could have the added bonus of giving you a house that’s easier to maintain, a definite plus if you’re struggling with various health conditions.

Other options could include taking out a retirement interest-only mortgage or a different form of borrowing entirely. You could also see what benefits you may be entitled to, or if any grants are available through your local authority (some may be able to offer grants to help with property modifications, for example).

Of course, if you don’t have any qualifying medical or lifestyle conditions you could always opt for a standard lifetime mortgage. Just remember to fill in any health questionnaire accurately and honestly so you know the full picture of what you could be eligible for.

Get matched with an enhanced lifetime mortgage specialist

Ready to find an enhanced lifetime mortgage? Speaking to an expert broker is essential, and we can help you find the specialist advice you need with our unique broker matching service.

Just tell us a few details and we’ll find the broker to suit – with plenty of advisors in our network who specialise in this sector you’ll soon have the right expertise on your side. Call 0808 189 2301 or fill in this form to get started with a free, no-obligation chat.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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