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A Guide to Enhanced Lifetime Mortgages 

If you’re exploring your equity release, it’s important to understand your options, including if you are eligible for an Enhanced Lifetime Mortgage.  

Take a look below where our equity release experts have outlined some information about Enhanced Lifetime Mortgages, including eligibility criteria and the advantages and disadvantages of the plan.  

What is an Enhanced Lifetime Mortgage? 

Enhanced Lifetime Mortgages are a type of equity release, designed to for individuals aged 55 and over with certain lifestyle factors or health conditions. Successful applicants for enhanced lifetime mortgage are typically able to release more equity from their home with a lower interest rate.  

If you choose to release equity with an enhanced lifetime mortgage, your loan, plus any accrued interest, will be repaid when you pass away or move into long-term care. 

Am I eligible for an Enhanced Lifetime Mortgage? 

To be eligible for an Enhanced Lifetime Mortgage, you must own your own home in the UK worth £70,000 or more, and the youngest applicant must be 55 or over. With an Enhanced Lifetime Mortgage, you will also be required to fill in a health and lifestyle questionnaire to determine your eligibility.  

Some Enhanced Lifetime Mortgages may also have an eligibility criteria including specific health conditions or lifestyle factors that may reduce life expectancy. Equity release providers will assess your health and lifestyle in order to determine the amount you can release from your property. 

What is the qualifying criteria? 

Elderly woman using tablet to explore equity release options

In addition to being aged 55+ and owning your own home in the UK worth £70,000 or more, some health conditions may entitle you to an enhanced lifetime mortgage.  

After filling out your health and lifestyle questionnaire, your equity release adviser will work closely with you and the equity release providers to determine eligibility and match you to the product that suits your circumstances. The health and lifestyle questionnaire will outline any health conditions that may impact your life expectancy and subsequently qualify you for an Enhanced Lifetime Mortgage.  

Some health conditions and lifestyle factors that may increase your eligibility:  

In addition to some lifestyle factors, including your alcohol consumption and any history of prescription drugs or smoking, there are some health conditions that may increase your eligibility for equity release. This can include:  

  • Diabetes  
  • High blood pressure 
  • Some types of Cancer (present or historical) 
  • High or low BMI (body mass index) 
  • Multiple Sclerosis 
  • Parkinson’s Disease 
  • History of angina, strokes or heart attacks 
  • A history of smoking 
  • Being on prescription medication 

During your no obligation appointment, our financial advisers will ask a few questions about your health and personal circumstances to help determine which lending criteria you match and how much you may be able to release.  

The advantages and disadvantages of Enhanced Lifetime Mortgages 

When exploring equity release options, it’s important to speak to a financial adviser to understand how equity release may impact your circumstances.  

The advantages: 

Some of the advantages of an Enhanced Lifetime Mortgage include:  

  • Unlike other equity release plans, you may be able to release more or benefit from lower interest rates if you have medical conditions. 
  • You may benefit more with an enhanced plan in comparison to a standard lifetime mortgage if you have ill health. 
  • A health screening is not required, however, in some cases your medical records may need to be reviewed. 
  • The money you will receive is typically tax-free but may be subject to taxation depending on how you spend it.  

The disadvantages: 

It’s important to understand some of the disadvantages of an Enhanced Lifetime Mortgage, these include: 

  • Your estate will be reduced and can leave little to no inheritance for your friends and family. 
  • If a doctor’s report is needed, the process may take longer than a standard Lifetime Mortgage.  
  • Your means tested benefits entitlement may be affected. 
  • You may be subject to early repayment charges if you wish to repay your enhanced equity release plan.  
  • The interest rate of your Enhanced Lifetime Mortgage may be higher than a standard plan.  

How does equity release work? 

Equity release can allow homeowners to access the equity tied up in their property, providing a lump sum or regular payments through a drawdown.  

The amount of equity in your home is equal to the value of your home, minus any outstanding loans or mortgages secured against the property.  

If choose to release equity from your home, the loan and any interest you have accrued will be repaid when you pass away or move into long-term care. 

Find out how much equity you could release with our free equity release calculator

How are Enhanced Lifetime Mortgages calculated?  

If you meet the eligibility criteria, including the minimum age of the youngest applicant, and home value, you will then be put forward for an equity release calculation to determine how much equity is available in your home. 

With an Enhanced Lifetime Mortgage, a further calculation will be made based on your lifestyle choices and medical history, this will be determined through a lifestyle questionnaire. 

Your finance adviser will then discuss your options, and which enhanced plans are available to you.  

Enhanced Lifetime Mortgages vs Lifetime Mortgages 

When it comes to Lifetime Mortgages, there’s no one size fits all, which is why it’s important to speak to a qualified equity release adviser. In addition to helping you understand your options, they will be able to offer advice regarding which product might suit your circumstances. 

Elderly man using smartphone to research equity release options

Enhanced Lifetime Mortgages offer an extra option when you’re looking at releasing equity from your home. Depending on how much you are looking to release, an Enhanced Lifetime Mortgage may be able to offer you a larger lump sum if you have a medical condition.  

Your equity release adviser will be able to advise you on which type of equity release will suit your circumstances, including which lifetime mortgage may offer a higher loan amount.  

Is equity release regulated? 

Enhanced lifetime mortgages in the UK are regulated by the Financial Conduct Authority (FCA). This regulation mandates clear, fair, and not misleading promotions, rigorous affordability assessments, and transparent disclosure of all costs and implications of the mortgage. 

At Bower Home Finance, we are proud members of the Equity Release Council. Not only does this mean we uphold their standards and principles, but we will also only suggest products that meet the Equity Release Councils guarantees. 

What are the safeguards of Lifetime Mortgages? 

If you’re considering a lifetime mortgage, understanding some of the safeguards that come with it including the right to move house, inheritance protection and no negative equity guarantee.  

Inheritance protection 

Some equity release plans allow you protect the inheritance you leave for you family in the future. By setting aside a percentage of your home’s value, you will be ringfencing some of your home’s value, protecting your family’s inheritance even after you’ve released equity from your home. 

No Negative guarantee 

As part of the Equity Release Council guarantees, each product we recommend will come with a ‘no negative equity guarantee,’ this ensures you or your estate will never owe more than the value of your home.  

Right to move home 

In addition to inheritance protection and the equity release council guarantees, you’ll always have the right to move home. If you have a lifetime mortgage this can be transferred across to your new home. However, if you have a home reversion plan you will need to take into consideration you will have a reduced amount of equity in your home as you have sold a percentage of your home.   

Can I repay an Enhanced Lifetime Mortgage? 

You can repay an enhanced lifetime mortgage, however, early repayment charges (ERCs) may apply if you repay your mortgage early, so it’s important to review the terms and conditions of the product you are considering.  

If you are looking to make regular payments towards your lifetime mortgage, speak to our equity release advisers to learn more about what this will look like with your plan.  

Is an Enhanced Lifetime Mortgage right for me? 

An enhanced lifetime mortgage can provide a valuable solution for a comfortable retirement, helping family financially, or consolidating debts. 

Understanding the pros, cons, and requirements of such a product is key to making an informed decision that suits your circumstances. 

Always seek advice from a qualified equity release lifetime mortgage advisor or broker before making significant decisions. 

The types of equity release 

If you’re considering equity release it’s important to understand your options. There are two main types of equity release, Home Reversion Plans and Lifetime Mortgages.  

The amount of equity you have in your property is equal to the value of your home, minus any outstanding loans or mortgages secured against it.  

See how much equity you could release with our free equity release calculator, or speak to one of our specialist equity release advisers to learn more about your options.  

Home Reversion Plan 

A home reversion plan allows you to sell part, or all, of your home to the provider at a discounted rate. You will have the right to remain in your property ‘rent free’ until you pass away, move into long-term care, or wish to move 

Learn more about Home Reversion Plans.  

Lifetime Mortgage 

A Lifetime Mortgage is a loan secured against your home and is not required to be paid back until you die or move into long-term care. 

There are different products under the Lifetime Mortgage umbrella designed for different circumstances including people who wish to make voluntary interest payments or have a medical illness.  

Learn more about Lifetime Mortgages. 

Finding the right solution for you 

Although equity release is a popular way to release tax-free cash from your home, it’s important to consider the implications of equity release, particularly on any means tested benefits you might claim. Our equity release advisers want what’s best for you which is why we won’t recommend a product or equity release if we believe it’s not the best solution for your individual circumstances. 

Whether you’re looking to release equity for debt consolidation, the holiday of a lifetime, or to increase your retirement income, our equity release experts will help you explore your options and provide an illustration of how equity release may affect you.  

Your financial adviser at Bower Home Finance will discuss if you would like to make monthly repayments or leave the interest to compound until the loan is paid off, in addition to any medical conditions, and if you would like to receive your cash as a lump sum or as a drawdown.  

Once your adviser has compiled all of the information they might need, they will begin to compare different lenders and products to find the best option for your individual circumstances.  

Try our free equity release calculator to see how much equity you could release from your home.  

At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.

Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.

Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,695 be payable.

If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.

To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668request a call backemail us, or join our live chat you’ll find on our website.

Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.