How does a health condition affect equity release? | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.


Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 12/03/2021

At a glance

  • A health condition could make you eligible to borrow more using an enhanced lifetime mortgage
  • You will usually be asked to complete a simple health questionnaire
  • A full medical is not required for equity release

A lifetime mortgage is the most common type of equity release. This is a form of borrowing secured against your home and provides a tax-free cash lump sum. It is available only to those aged 55 years and over. A lifetime mortgage allows you to remain in your home without the need to repay the loan until you go into either go into long term care or pass away.

Read our guide to find out more about how equity release works and the different types of lifetime mortgage that are available.

How much could you release using a lifetime mortgage?

The maximum amount of cash a homeowner can release using a lifetime mortgage depends on their age, personal circumstances, property value and their health. When applying for equity release the lender will agree the maximum amount you can drawdown. This amount is also expressed as the maximum loan-to-value that you can borrow.

We used the equity release calculator of our preferred equity release broker, HUB Financial Solutions to compare the differing amounts people might be able to drawdown.

Property value Location Age of youngest applicant Maximum that could be released Maximum LTV
£500,000 England 65 years old £195,000 39%
£350,000 Scotland 70 years old £128,100 37%
£300,00 England 80 years old £160,500 54%

Source: HUB Financial Solutions equity release calculator. Note: figures are for single applicants only. You may still need to meet the valuation and criteria requirements of the lifetime mortgage lender. Max LTV is rounded up to the nearest whole number.

What is an enhanced lifetime mortgage and how do they work?

Those with health conditions may find they can increase the maximum LTV available to them by using an ‘enhanced lifetime mortgage.’ An enhanced lifetime mortgage uplifts the maximum LTV available and therefore also the total amount the borrower can drawdown. The extent of these uplifts depends upon the nature of the medical conditions and the borrower’s age.
Enhanced lifetime mortgages usually have higher interest rates compared to traditional lifetime mortgages.

A good equity release adviser will help those that have a medical condition to assess if an enhanced lifetime mortgage and the higher interest costs this might incur are worth the additional uplift in cash released.

Should I disclose my health conditions when applying for equity release?

Lenders usually ask for information about a borrowers’ state of health. Answering these questions honestly is important to make sure you do not breach any conditions of the lifetime mortgage and could help you if you need to access a greater amount of borrowing using an enhanced lifetime mortgage.

Will a medical be required for equity release?

Borrowers are not asked to have a full medical to be eligible for an enhanced lifetime mortgage. Mostly borrowers are asked to complete a simple health questionnaire. This allows the adviser to determine whether an enhanced lifetime mortgage is suitable. These questions should be answered honestly as the lender may write to the borrower’s doctor to confirm the details are accurate.

Find out how much money you could release from your home

Go to the equity release calculator provided by HUB Financial Solutions and see how much money you could release from your home.

Compare equity release interest rates

Moneyfacts.co.uk publishes the best equity release interest rates each month. These can be a useful guide for those wanting to find out more about equity release.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

At a glance

  • A health condition could make you eligible to borrow more using an enhanced lifetime mortgage
  • You will usually be asked to complete a simple health questionnaire
  • A full medical is not required for equity release

Guide contents

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy