Remortgage With Long Term Illness

How Does a Long-Term Illness Affect Remortgaging?

When you apply to remortgage, the lender's primary concern is whether you can afford the repayments. While your health condition itself is not typically a direct factor in the lending decision, the financial consequences of your illness may be relevant.

Key areas lenders may consider include:

• Your current income — if your illness has led to reduced working hours, sick pay, or benefits income, this affects the affordability assessment
• Stability of income — lenders want to see that your income is reliable and sustainable for the mortgage term
• Existing financial commitments — any additional costs related to your condition, such as care, adaptations or travel, may be factored in
• Credit history — if your illness has led to financial difficulties and missed payments, this could affect your options

Importantly, lenders are not allowed to discriminate against you because of a disability or health condition under the Equality Act 2010. The assessment should be fair and based on your financial circumstances, not on assumptions about your health.

Many people with long-term conditions are in stable employment or have reliable income from other sources. In these cases, the remortgage process is often no different from anyone else's experience.

Income Sources Lenders May Accept

If your long-term illness has affected your employment, you may be relying on different income sources than a traditional salary. Understanding which income types lenders accept can help you plan your application.

Employment income: If you are still working, whether full-time, part-time, or with reduced hours, your salary is assessed in the usual way. Occupational sick pay is also typically accepted by lenders.

Benefits income: Many lenders accept certain benefits as part of your income assessment. These may include:

• Personal Independence Payment (PIP)
• Disability Living Allowance (DLA)
• Employment and Support Allowance (ESA)
• Universal Credit (the disability element may be considered)
• Attendance Allowance
• Carer's Allowance (if applicable)

The extent to which each benefit is included varies between lenders. Some accept 100% of benefits income, while others may only count a proportion. Some lenders do not accept benefits at all.

Pension income: If you have been medically retired or receive an ill-health pension, this is generally accepted as a stable income source.

Insurance payouts: Income from critical illness cover, income protection insurance or permanent health insurance may be considered by some lenders, particularly if the payments are guaranteed for a set period.

A specialist mortgage adviser can identify which lenders are most likely to accept your particular combination of income sources and present your application in the strongest way.

Product Transfers vs Full Remortgage

If your long-term illness makes a full remortgage application daunting, a product transfer with your existing lender might be a less stressful alternative.

A product transfer involves switching to a new deal with your current lender. The key advantage is that many lenders do not conduct a full affordability reassessment for product transfers, particularly if you are not borrowing any additional money and your payment record is good.

This means your health condition and any changes to your income may not be scrutinised in the same way as they would for a new mortgage application with a different lender. Your existing lender already knows your payment history and may simply offer their available rates.

However, there are potential downsides:

• Your current lender's rates may not be the most competitive on the market
• You might miss out on significant savings by not shopping around
• If you need additional borrowing, a full assessment is usually required even for a product transfer

The best approach is to compare a product transfer quote from your current lender with what a mortgage adviser can find on the open market. This way, you can make an informed decision about which route offers the best value for your circumstances.

If the savings from switching to a new lender are marginal, the simplicity of a product transfer may be the better choice. If the difference is substantial, a full remortgage could be worth the extra effort.

Your Rights Under the Equality Act

The Equality Act 2010 protects people with disabilities and long-term health conditions from discrimination, including in the provision of financial services.

In the context of mortgage lending, this means:

• Lenders cannot refuse your application simply because you have a long-term illness
• They must make reasonable adjustments to their processes to accommodate your needs
• They cannot charge you more or offer less favourable terms because of your condition
• Their affordability assessment must be fair and based on your actual financial circumstances

A condition is considered a disability under the Act if it has a substantial and long-term adverse effect on your ability to carry out normal day-to-day activities. Many chronic health conditions fall within this definition.

If you feel you have been treated unfairly by a lender because of your health condition, you have several avenues for complaint:

• The lender's internal complaints procedure
• The Financial Ombudsman Service
• The Equality Advisory Support Service (EASS)
• Legal action under the Equality Act

In practice, most lenders aim to comply fully with the Act. Issues are more likely to arise from inflexible automated systems than from deliberate discrimination. A good mortgage adviser can help navigate around these systemic issues by choosing lenders with more accommodating processes.

Managing Your Mortgage If Your Health Changes

If you already have a mortgage and your health deteriorates, there are steps you can take to manage the situation and protect your home.

Speak to your lender early. If you are struggling or anticipate difficulties with your repayments, contact your lender as soon as possible. Under FCA guidelines, lenders are required to treat customers in financial difficulty sympathetically and consider options such as reduced payments, payment holidays, or term extensions.

Check your insurance policies. Review any mortgage payment protection insurance (MPPI), critical illness cover, or income protection insurance you may have. These policies could provide financial support during periods of illness.

Explore benefits entitlements. You may be entitled to benefits that you are not currently claiming. Organisations like Citizens Advice and disability charities can help you identify and apply for relevant support.

Consider a term extension. Extending your mortgage term reduces your monthly payments, making them more manageable on a reduced income. This does increase the total amount of interest you pay, but it can prevent arrears and protect your credit rating.

Seek debt advice if needed. If your financial situation is serious, free debt advice services such as StepChange, National Debtline, or Citizens Advice can help you develop a plan to manage your commitments.

Taking action early gives you the most options. Ignoring financial difficulties rarely makes them better and can lead to more serious consequences.

Finding the Right Adviser

When remortgaging with a long-term illness, working with the right mortgage adviser can make a significant difference to your experience and outcome.

Look for an adviser who:

• Has experience with complex income — they should understand how to present benefits income and non-standard earnings to lenders
• Is whole-of-market — access to the full range of lenders increases your chances of finding one that suits your circumstances
• Is patient and understanding — remortgaging during a period of ill health can be stressful, and a good adviser will take the time to explain things clearly
• Knows lender policies in detail — they should be able to tell you which lenders accept specific benefits and how they assess non-standard income

Many advisers offer initial consultations at no charge, allowing you to discuss your situation and understand your options before committing to anything.

If mobility or energy levels make face-to-face meetings difficult, many advisers now work entirely by phone, video call and email. Do not let practical barriers stop you from getting the advice you need.

Your health condition is a part of your life, but it does not have to define your mortgage options. With the right support, you can find a deal that works for your financial circumstances and gives you one less thing to worry about.