Poor Health Can Actually Be a Benefit with Enhanced Equity Release Schemes

Poor health has always been known to be a cause of worry, but at least in case of opting for an equity release from your property, you can be happy that you stand a chance of deriving some extra benefits because of your bad health. These are the special cases and are commonly known as an enhanced lifetime mortgage scheme to the UK market. This benefit comes your way because of a simple reason that poor health has an effect on potentially reducing your overall life expectancy.

Equity release is a type of mortgage that you take that is secured on your property, but without a need to vacate it or even to sell it as long as you are alive. These are the special terms applied when releasing the equity accumulated in your property without selling it off. It offers a viable solution to all those who need money and live the life as they want without selling their house. You retain the ownership of your house as long as you are alive and are assured that your beneficiaries will never end up owing more than its value.

These equity release schemes are nothing but a refined and sophisticated form of mortgage arrangement for elderly people. Your house could only be sold in case of your death or if you move permanently into a long term care home. If the equity release is made in the name of joint applicants, then the house could be sold only in case of death of the surviving partner.

After the death of the person, the property is sold and the loan is repaid back to the equity release company. It uses the accumulated cash value of a house and lets the owner enjoy the release of the cash in spending it in a way that he/she wants. The lender takes into account the life expectancy of a person while deciding the initial loan-to-value, as well as an enhanced amount that could be released in your case.

There are several health conditions that entitle you to get the benefit of enhanced equity release. Some of these health conditions include long term smoking, diabetes, abnormal weight, heart diseases, cancer, Parkinson’s and many more. It is a long list and you can ask the provider about an inclusion of any particular disease. However, in order to qualify a health and lifestyle questionnaire will need to be completed in order for the enhanced equity release company to establish the severity & ultimately the size of the initial amount they will release.

An enhanced lifetime mortgage scheme is set up for the best possible solution for you. There are generalities with regards to the advantages and disadvantages you might find with such a mortgage option. It is best to look at them in a list to fully understand what could happen once you release a little equity from your home.

•    With a lifetime mortgage plan a home is sold only if there is no way to pay off the mortgage. Usually a retiree has no other financial benefit left to pay the mortgage at time of death or removal to a care facility. A beneficiary can supply the cash to pay off the loan and keep the house, if that is their desire. Note also that life insurance plans a homeowner might have could cover a mortgage and funeral, whereby the funds are used to keep the home rather than go to the beneficiary.

•    Home reversion which is different from enhanced lifetime mortgage scheme is where a house is sold absolutely upon death or care facility living of the homeowners. It is because part of the house has already been sold to the provider. Lifetime mortgages keep the ownership with the person taking out equity.

•    Payment of interest and the principle balance of the equity loan is only due when the person moves out or dies. In the event the agreement was signed by a couple, then the repayment is due when the other person in the house moves out or dies.

An enhanced lifetime mortgage scheme is just one option open to you. You have plenty of choices and one might fit your lifestyle and expectancy a little better. Speak with an adviser or agent to find out more about the different schemes available to ensure that an enhanced option is really the way you should go. Also talk with family so they understand what you wish to do for a more enjoyable retirement.