Lifetime mortgage providers have attempted to fill any void in the industry that can be of help to older homeowners. In order to make certain there are products for a variety of situations many companies started offering the enhanced lifetime mortgage. It is also known as ill-health and impaired lifetime mortgage. While it has three different names, the principle is exactly the same no matter what the provider calls their product.

Almost all lifetime mortgages are based on the standard roll-up equity release. There is an initial sum provided to the homeowner based on age and property valuation. The amount is usually the maximum loan to value. For example a home that is £100,000 and a person that is 65 may be able to obtain 20% of the home value in a loan. This would be the maximum so they would receive £20,000 for a loan.

The enhanced lifetime mortgage takes this maximum loan to value further. It is based on health. In fact it is the one mortgage product available in the industry that allows poor health to be an advantage. Health issues including diabetes, obesity, heart disease, lung cancer, and other illnesses affect longevity. A healthy adult can live to 100 or a little longer. The average person typically lives past 85 to 95. Loans are set up based on this life expectancy determining how many potential years are left, thus the length of time the loan might be outstanding. When there are health issues life expectancy drops thereby opening up more “maximum” funds to provide the homeowner with. The point of enhanced lifetime mortgages is this need for more funds and the fact that health is poor where providers are almost certainly guaranteed with an earlier repayment.

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Advantages of Enhanced Lifetime Mortgages

The main advantage of this loan type is the increase in funds. It is also being able to secure funds even when there are health issues. When it comes to discussing advantages, there are options for inheritance protection. This is a clause put into the loan to guarantee a certain portion of the property cannot be used in the loan or for repayment. It protects the inheritance that someone may want to leave behind. Other advantages such as receiving tax free money to live on and repaying the loan at death make it an attractive option.

Disadvantages of Impaired Equity Release

The youngest homeowner must have an illness to qualify for this loan. They also must meet the minimum age requirement of 55. The lifetime mortgage when filed as a joint application can actually remain unpaid until the second homeowner passes on or moves to long term care. This can be a disadvantage because all the funds are taken out early leaving nothing left and potentially wiping out the entire inheritance unless protection is in place.

For some their situations require taking out more funds while someone with an illness is still living. Certainly being able to live comfortably or taking a last special holiday is important.