More than 15 years ago, Aviva started offering equity release schemes under the name of Norwich Union. Today, Aviva has helped more than 100,000 retiree’s access the equity in their homes. One way Aviva assist in this release of equity is through the Aviva Lifestyle Flexible Option. This is their main type of equity release via a drawdown lifetime mortgage.
How does the Aviva Flexi Plan Work?
In the first instance, homeowners are given a fixed rate mortgage for life with an overall cash reserve facility. From this cash reserve the applicant can decide on whatever amount they need to withdraw initially, with any unused funds being left in the Aviva drawdown facility. In the future, whenever further cash is required, the homeowner simple contacts Aviva & instructs them how much tax-free cash they require. Any amount from £2,000 upwards can then be sent, either direct to the homeowner’s bank account or by cheque, usually within a couple of weeks.
The big advantage of drawdown lifetime mortgages is that interest is only charged on the amount taken from the cash reserve facility and not the maximum equity release sitting in the account. Hence, this is why drawdown equity release schemes are a cost effective lifetime mortgage plan & the most popular in the market today.
Features and Benefits of Lifestyle Flexible Plans
• Cash on Completion – can tailor the size of each release to suit spending plans and beneficially tie in with means tested benefits
• Cash in Reserve – no interest is charged on this money & can be accessed without any further administration costs
• Flexible Repayment – Aviva will now allow 10% repayment each year without any early repayment charges, based on the original amount borrowed
• Enhanced Interest Rate – if poor health is qualified, then Aviva will offer a lower interest rate than standard terms
Criteria of the Aviva Flexible Lifetime Mortgage
Upon completion of loan paperwork clients receive a tax free lump sum to spend as they wish. No repayment is required during this period, nor an any payment be made as part of the voluntary repayment programme. The loan comes with a no-negative equity guarantee as per UK Equity Release Council regulations.
To qualify for the Aviva loan the youngest homeowner’s age must be 55+. The property value must meet the minimum worth of £75,000. Any property in Wales, England, or Scotland qualifies as long as it is the homeowner’s main residence.
For the initial lump sum payment a withdrawal of £10,000 is required; however, if necessary more can be withdrawn upto the full reserve facility. Cash held in reserve has a required minimum of £15,000, where clients must take a minimum of £2,000 on each successive withdrawal or they can take more. No fees are charged on additional withdrawals. Interest is repaid at the end of the homeowner’s life along with the principle borrowed amount. Repayment may also be required if the homeowner moves to a long term care facility, or simply wishes to move & repay in full, but could be subject to early repayment charges.
Fees are associated with the set-up loan approval process such as an arrangement fee, valuation fee & your legal fees. Interest is compounded annually, but based on a daily calculation. Aviva does offer incentives to make their loan more attractive to new clients – see incentives below
Enhanced Features for the Aviva Drawdown Mortgage
Aviva will factor in ill-health for the calculation of the maximum equity release. A better interest rate may be awarded depending on the results of a health and lifestyle questionnaire.
The company’s Lifestyle Flexi Plan offers a maximum 13% of the home value to individuals aged 55 and rises as the age increases. The maximum release of equity is 45% to anyone 90 years or older. There is a maximum loan amount set at £600,000, which applies to anyone over the age of 84. These percentages are awarded so that the loan-to-value percentage can maintain the no-negative equity guarantee.
Flexible repayment options are also available. Aviva has a new voluntary repayment plan. The client can pay up to 10% of the principle amount each year without a repayment penalty. In 16-17 years it is possible for full repayment of the loan if the full 10% per annum is repaid throughout on the principle amount. There is also a survivor benefit if joint application is in place and one homeowner dies, the survivor can repay the loan without penalty as long as the full repayment occurs within 3 years.
Incentives for Aviva Equity Release
An exclusive offer: free valuation plus £1,000 cash back and possible reduced interest rates based upon borrower criteria. Call the team on 0800 689 3149 for a personalized quote or further details.