What Is Enhanced Equity Release and Do You Qualify?

What Is Enhanced Equity Release and Do You Qualify?

What Is Enhanced Equity Release and Do You Qualify?

Enhanced equity release is a type of lifetime mortgage designed for people with health conditions or lifestyle factors that may impact their life expectancy. It allows them to access more equity or get a lower interest rate than standard equity release products.

To qualify for enhanced equity release, you typically need to:

  • Be aged 55+
  • Own your home outright
  • Have an eligible health condition like heart disease, diabetes, MS, Parkinson’s etc.

The main benefits are releasing more tax-free cash or securing a lower interest rate on your lifetime mortgage. The maximum equity you can release depends on your age, health, property value and the lender’s criteria.

What is an Enhanced Lifetime Mortgage?

An enhanced lifetime mortgage, also known as an impaired lifetime mortgage, is an equity release scheme that considers an individual’s health and lifestyle when determining the maximum loan amount. These mortgages allow borrowers in poor health to access more funds compared to a standard lifetime mortgage.

To qualify, applicants must be over 55 and own their home. The loan is secured against the property and interest rolls up over time. The mortgage is repaid when the last borrower dies or moves into long-term care.

Best Drawdown Lifetime Mortgage

A drawdown lifetime mortgage is a type of equity release product that allows homeowners, typically aged 55 and older, to release equity from their property in stages rather than as a single lump sum. This can be a flexible way to access the value of your home as you need it.

However, the “best” drawdown lifetime mortgage for you will depend on your individual circumstances and preferences, and it’s important to seek independent financial advice before making any decisions.

When considering a drawdown lifetime mortgage, here are some factors to consider:

  1. Interest Rates: Compare the interest rates offered by different lenders. Lower interest rates can result in a smaller overall debt over time.
  2. Flexibility: Look for a product that offers flexibility in terms of when and how you can access the funds. Some plans may have minimum withdrawal amounts or limits on how frequently you can make withdrawals.
  3. Inheritance Protection: If leaving an inheritance to your heirs is important to you, consider products that offer inheritance protection options.
  4. Early Repayment: Check if the mortgage allows you to make partial repayments or full repayments without incurring early repayment charges.
  5. Loan-to-Value (LTV) Ratio: Different lenders may offer different LTV ratios, which determine how much equity you can release. Find a product that suits your needs and goals.
  6. Fees: Be aware of any fees associated with the mortgage, including arrangement fees, valuation fees, and legal fees.
  7. Independent Financial Advice: Consult with a qualified financial advisor who specializes in equity release to help you navigate the available options and make an informed decision.
  8. Eligibility: Ensure that you meet the eligibility criteria for the specific drawdown lifetime mortgage you’re considering, as they can vary from one provider to another.
  9. Regulation: Verify that the lender is regulated by the Financial Conduct Authority (FCA) and that the product complies with the Equity Release Council’s standards.

It’s important to note that equity release products, including drawdown lifetime mortgages, can have a significant impact on your finances and your estate.

Carefully consider the long-term financial implications, potential alternatives, and discuss your plans with family members or beneficiaries.

Generally, the “best” drawdown lifetime mortgage for you will depend on your individual needs, goals, and financial situation. Make sure to conduct thorough research and seek professional advice to make an informed decision.

Here are some key points about finding the best drawdown lifetime mortgage:

  • Drawdown lifetime mortgages allow you to take your equity release in installments rather than as a lump sum. This can help avoid interest stacking up on money you don’t need yet.
  • Interest rates on drawdown plans are generally higher than on lump sum mortgages. However, taking money as you need it can work out cheaper overall.
  • Look for plans with low initial interest rates and generous drawdown limits. Many lenders allow up to 50% or more of the loan to be taken initially.
  • Plans with higher LTVs allow access to more cash overall. Enhanced drawdown deals based on health/lifestyle may allow total lending into the 60% LTV range.
  • Consider plans with flexible features like payment holidays or the ability to make overpayments when funds allow. This can help reduce the overall cost.
  • Compare deals carefully. Independent brokers can help find the most suitable plan for your needs and circumstances.
  • Useful comparison sites for drawdown lifetime mortgages include Moneyfacts, Age Partnership, Equity Release Supermarket and MoneyHelper.

 

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