An Ill-Health Lifetime Mortgage Scheme, or Enhanced Lifetime Mortgage, takes a homeowner’s health and lifestyle into account when determining the features of the mortgage product. If a homeowner is particularly unhealthy or leads an unhealthy lifestyle in general, the lender may either increase the maximum lump sum available to the homeowner or may reduce the interest rate below the standard rate. This product is, therefore, particularly useful for those homeowners who are living unhealthy lifestyles or who have a history of poor health. The reason the lender can afford to offer a higher lump sum or a lower interest rate is because the potential life expectancy for someone who qualifies for this product is lower than a healthier individual.
The calculation used to determine how much a homeowner can borrow follows much the same formula as a standard lifetime mortgage and uses the youngest homeowner’s age and the property valuation. There may be an additional step as well. The application may include a health and lifestyle questionnaire which is a number of questions used to determine the homeowner’s health which may be used to help determine the level of enhancement that may be offered.
There are a number of conditions that help a homeowner qualify for this specified mortgage. They include smoking more than 10 cigarettes a day for at least 10 years, obesity, heart conditions including angina, stroke, high blood pressure, various types of cancer, Parkinson’s disease, Dementia, different medications, and early retirement based on poor health. Homeowners should always be prepared to verify that these conditions exist if trying to obtain an Ill-Health Lifetime Mortgage.
Ill-Health Lifetime Mortgages are not offered by all providers of equity release products and the lenders that do offer this service offer different features. Some may offer a lower interest rate while others offer an enhanced drawdown facility. If interested in this product, you should be prepared to submit documentation from your physician to the lender. You may also want to shop around the lenders that do provide this specific product so that you are able to get the enhanced feature you want, whether that be a lower interest rate or a higher lump sum payment.