It isn’t very often that having a health condition or a history of smoking can be of any benefit to you; quite the opposite in fact when it comes to applying for life insurance, for example. But when it comes to equity release, being honest about your medical history could see you accessing a bigger percentage of your home’s value.
How? Enhanced equity release plans increase the amount you can borrow against the value of your home based on any qualifying medical conditions and lifestyle issues you may have.
The providers make the assumption that as a result of your health condition, high BMI or smoking habit, you are likely to have a reduced lifespan, so will not take the loan for as long as those without the same qualifying conditions. In short, it is a gamble of sorts, but on the part of the provider.
In some cases, Loan to Values (LTVs) as high as 55.5 per cent can be achieved with enhanced rates. This means that when you work out the total equity available in your property, over half the value could be unlocked with an enhanced equity release plan. This can be compared against a typical average healthy LTV of between 30 and 35 per cent.
Earlier this year, equity release provider more2life released figures showing:
- An estimated 75% of customers aged 65 and over have conditions that could qualify them for an enhanced plan
- As many as three in four qualify due to smoking, being overweight, having high blood pressure, cancer, Parkinson’s disease or one of the many other qualifying conditions
- Despite this, a large number of customers are missing out on the potential for bigger cash releases, with only around one in six equity release products sold featuring enhanced terms
Geoff Charles, CEO of Bower said: “With potentially over half of their property wealth now accessible to be tapped into, an enhanced plan may enable those seeking a maximum release to do so on the grounds of poor health, or a history of qualifying health conditions.
“Whether the homeowner is opting to drawdown cash over time, or take a maximum cash sum, they can now enjoy more flexibility and choice over how and when they access their money.”
Equity release is not right for everybody of course, so Bower recommend you speak to an independent specialist in retirement lending before making a decision. Your adviser will take the time to explain the advantages and disadvantages of each type of plan; including how equity release will reduce the value of your estate and may affect your entitlement to some state benefits.