An enhanced lifetime mortgage scheme is designed especially for clients who have a shorter than average life expectancy due to a chronic illness or lifestyle choices. A shorter term of loan allows the provider to lend or release a higher than normal or enhanced amount. Although there are no ‘enhanced’ home reversion plans available, and home reversions are not loans, the idea behind enhanced mortgages does apply to home reversion plans, too.
Home reversion offers a way to turn some of the equity built into your home into usable cash, by transferring ownership of a portion of the house to the home reversion providers in exchange for a cash lump sum. You retain the right to live in the house rent free until you die or move into care, when the house is sold and the amount recovered. There are no restrictions on what you can use the cash lump sum towards.
Home reversion is therefore not a loan, but nor is it a traditional sale. It involves some amount of risk taking by the home reversion provider, who is essentially making an investment into your property. Therefore, like a mortgage or a loan, the shorter the time over which the provider can expect a return on their investment, the lower the risk involved.
Lower risk allows home reversion providers to make a better offer. How much money a home reversion can offer for a certain share of the property depends on the property valuation, the age of the applicant and the actual percentage being sold. But assuming the other factors are constant, the higher the age of the applicant, the more money they are able to offer on a share of the property.
In answer to the question – there is currently no enhanced home reversion scheme being offered on the market. But the concept of enhanced rates for applicants with a shorter life expectancy still applies to home reversion plans as providers are able to offer more money to those who are expected to die sooner.
Partnership and Hodge Lifetime used to offer enhanced home reversion plans specially designed for impaired life applicants. However, the availability of impaired lifetime mortgages reduced the demand for these products and they were consequently withdrawn from the market.
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