There is one way in which the poor health of pensioners can be beneficial to them – equity release. Equity release schemes allow retired homeowners to release cash from their properties. Many equity release mortgages take into account the medical condition of the person or persons applying for the mortgage to determine how much money they can take out of their properties. These mortgages are commonly known as impaired life equity release schemes.
Many equity release providers including Aviva, More2life and Partnership realize that pensioners with poor health have different needs than pensioners with good health and will therefore need more money to sustain their needs and to enjoy their lives with their family and friends while they are physically still able to do so.
The general rule is that the worse the health of homeowners, the more money they will be able to take out of their properties. Common health issues that are taken into consideration and that might result in a homeowners qualifying for more money include: diabetes, strokes, angina, cancer, heart attacks and Parkinson’s disease.
In most cases, pensioners are not required to pay the monthly interest but instead it is allowed to be rolled up until the mortgage has been repaid. In most cases, the mortgage is repaid when the homeowner dies.
Most equity release schemes are calculated based on the life expectancy of the person. A life impaired equity release scheme is based on the logic that poor health will have a direct impact on the life expectancy of the person. However if the person lives longer than is expected, there might be a danger in that the initial advance and the accumulate interest might become more than the value of the property. In order to prevent this, many equity release providers place a maximum loan that is allowed to be borrowed based on the age and the health conditions of the borrower.
With the help of online calculators, pensioners are able to estimate how much money they will be entitled to base on their age and their physical health. It is however advisable to seek professional financial advice before committing to an equity release scheme.