Equity Release Scheme
An Ill-Health Lifetime Mortgage Scheme can also be referred to as an Enhanced Lifetime Mortgage. This particular product will use a homeowner’s health and lifestyle to determine the potential for some enhanced features associated with the lifetime mortgage. The features that may be altered include the maximum equity release available and the interest rate applied. If the homeowner is eligible, the equity release available may be higher. Similarly, if the homeowner is eligible, the interest rate may be lowered.
To qualify for an enhanced lifetime mortgage, the homeowner must be particularly unhealthy, most specifically suffering from chronic health conditions, or must lead a particularly unhealthy lifestyle. As such, the product is most suited for homeowners who have a history of poor health or who have lifestyles that would be expected to shorten their life expectancy.
How an Ill-Health Lifetime Mortgage Works
The reason the lender can make changes to the features of this product is because qualified homeowners are likely to have a shorter life expectancy than someone who is healthier. This allows the lender to either increase the maximum amount available or charge less interest.
The calculation used to determine the maximum equity release is the same formula used to determine the release on a standard lifetime mortgage. This includes the youngest homeowner’s age and the value of the property. In addition to this standard determination, for an enhanced equity release product, the homeowner may need to complete and submit a health and lifestyle questionnaire. This questionnaire asks about the homeowner’s health and can be used to determine the level of enhancement for which the homeowner may be eligible. The homeowner should also be prepared to share health records if necessary.
There are several health conditions and lifestyle choices that could help a homeowner qualify for an ill-health lifetime mortgage. These include smoking more than 10 cigarettes per day for at least 10 years, obesity, high blood pressure, stroke, various heart conditions including angina, numerous forms of cancer, dementia, Parkinson’s Disease, early retirement due to poor health, and having to take certain medications. Again, along with sharing this information, the homeowner should be prepared to prove any existing conditions or lifestyle choices.
Not all lenders provide an ill-health lifetime mortgage product and those that do may administer it differently. Some offer different features than others. For example, some lenders default to offering a higher maximum release while others default to lowering the interest rate. As another alternative, some may offer an enhanced drawdown facility. It really depends on the lender.
Regardless of the lender, when applying for this product, the homeowner should always be prepared to submit any required documentation to prove the existing conditions or lifestyle choices in order to be deemed eligible. However, if deemed eligible and approved, the homeowner is likely to benefit from at least one enhanced feature. Because different options, features and enhancements are available, it is always advisable to shop around for the lender that offers the most attractive feature.