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Equity Review | August 20, 2019

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Enhanced Equity Release Schemes

Enhanced Equity Release Schemes
Kenneth Hardman

Enhanced Equity Release Schemes, also referred to as Enhanced Lifetime Mortgage Schemes are financial schemes that favour you when you are in poor or ill health. People whose medical expenses bite their pocket take loans for their medical care. They basically have less life span than normal people and hence their loan term will also be short. This means a lesser risk to the loan provider; therefore, the more ill you are the greater the amount you can borrow.

The Enhanced or Impaired Lifetime Mortgage scheme is available to those who qualify for certain criteria set by the provider. Once you wish to take a loan owing to your poor health, you will have to fill out a health and lifestyle questionnaire set by the provider. The questionnaire will contain some basic questions regarding your health and lifestyle. Questions regarding your health will include your height, weight, etc. Questions relating to your lifestyle will be like – whether you drink, how frequently you drink, are you a drunkard or an occasional drinker etc. The provider will use the answers of these questions to ascertain your health. The poorer the health you have, the more the amount and the easier the loan will be processed.

The questionnaire also asks about any health issues you might currently have such as frequent heart attacks, HIV/Aids, MS, or other health conditions seen as a possible reducer to your life span. If you do have a health issue like cancer in which the projection of time is already calculated you can use your doctor’s opinion and a second opinion to help you with the application process. A provider will want details of your health and the more proof you give them that you qualify for an enhanced scheme the easier it will be to approve your application.

Currently, there are three providers offering the enhanced equity release schemes:

AVIVA: Aviva Lifestyle Lump Sum Max is one most popular among the small markets. It offers a wonderful interest rate of 5.57% to 7.63% based on the personal criteria and the choices chosen. The minimum age of the client has to be 55 and the minimum value of the property has to be £75,000. The property has to be in England, Wales, Scotland or North Ireland. The client can borrow £15,000 and the lump cash received is tax free. The interest is fixed for fourteen weeks. The client can choose an inheritance guarantee for the mortgage property.

More2life enhanced lifetime mortgage: It offers an interest rate of 6.88% and it is fixed. The minimum age of the client has to be 55 and the minimum value of the property has to be more than £70,000. The property has to be in England, Wales and mainland Scotland. It has the highest release and drawdown facility. The drawdown makes it popular as you could take the cash tax free and in stages. The specialty of this is the Protected Guarantee Scheme where one can choose a percentage of the property NOT to be mortgaged. This will ensure that there is some fixed property to be inherited by the beneficiaries.

Partnership Enhanced Plan: Partnership provides lifetime mortgages for people with chronic ill health. Their cover generally includes diseases like diabetes, heart disease, mental illness, obesity, kidney/liver transplant etc.

It is always essential that you check information regarding equity release schemes as things can change over time. While there are three providers right now, in a year or two there could be only one provider or more than a dozen. The equity release market is changing due to the interest from retirees.

Several people are also coming up for retirement in the next five years, a direct result of the baby boom from World War II. With life expectancy of most individuals at a higher number it also ensures the equity release market is here to stay. Strides in medicine can also change life expectancy for the better in the case of certain diseases considering the current emphasis on Aids/HIV, cancers, and other horrible illnesses still plaguing millions of lives. This can create a change in equity release plans over the years.

It is important to speak with an adviser regarding equity release schemes, such as setting a free consultation with one of the above named providers. In this way you can find out more about the enhanced plans and how they differ from other lifetime mortgages or even home reversion. There are more options open to you and your particular situation.