Formerly Norwich Union, the Aviva brand was established more than 15 years ago as an equity release company. Aviva has more later life products for retiring and retired homeowners than most of the other lifetime mortgage companies in the market. Already their experience has benefited over 100,000 homeowners by helping them access cash tied up in their house. The Aviva Lifestyle Flexible Option is just one of the available equity release plans Aviva has on the market.
Summary of the Lifestyle Flexible Option
The Lifestyle Flexible Option allows homeowners to take a smaller initial sum and access a reserve facility over time. Access is granted at anytime in the future, when homeowners need it. This plan is a type of drawdown lifetime mortgage. The reserve facility does not require further approval for any withdrawals once the initial amount is released. There is a minimum of £2,000 required for each additional withdrawal which are made available with no administration fees.
Criteria of the Aviva Lifestyle Flexi Plan
Plans are available to homeowners aged 55 years and above. The youngest homeowner must be at least 55 years. Joint applications are possible and there are new voluntary repayment options for joint applicants. The minimum property value required to start opening the Aviva Lifestyle Flexible Option is £75,000.
The minimum cash on reserve is set at £15,000, where £10,000 must be taken at the beginning of the loan agreement. Homeowners are able to leave up to 50% of the maximum borrowed amount in the cash reserve. Interest is not payable until the money has been released from the reserve facility.
The property must be located in England, Scotland, or Wales.
Maximum Cash Release Calculation
When calculating the maximum release available, Aviva will apply a percentage to the property value which is based on the age of the youngest homeowner. Aviva uses 85% of the home value for maisonettes and flats. Loan-to-value percentage start at 13% for plans starting at age 55 and up to 45% for anyone aged 84 or over. A maximum loan awarded for the Lifestyle Flexible Option is £600,000. Additionally, there is no limit on how often a client can withdraw as long as sufficient funds are available.
The initial lump sum withdrawal has a fixed interest rate. Any subsequent withdrawals will be at the current market rate. The rate may increase or decrease each time depending on current market rates at the time of the withdrawal.
Interest Rate Options
The Aviva Flexible Drawdown Plan has no single rate of interest. Aviva determine the interest rate based on the individual criteria of the applicants. The rate applicable will therefore be based on the loan-to-value ratio & the age of the youngest homeowner.
In addition, depending on the benefits homeowners choose such as the free valuation option, cashback of £0, £500 or £1,000 then the interest rate will be affected accordingly. This loan is ideal for homeowners looking for a bespoke equity release plan.
New Voluntary Repayment Options
It is now possible for any planholder to make 10% per annum repayments on Aviva equity release products. To keep up with demand and changing times, Aviva upgrades their plans like the enhanced lifetime mortgage and flexible lifestyle option. Homeowners can decide to repay just interest or interest/capital to control their equity release balance. This means the loan can theoretically be paid in full within 16 -17 years if the maximum 10% allowance is utilised.
With more control over their balance, there is a possibility of repaying the equity release off in a fixed term or making interest payments without penalty. This feature is designed to provide inheritance protection for future beneficiaries.
For joint applicants, Aviva now have the option where one partner dies or needs to move into long term care the surviving partner can downsize or repay the mortgage in full without any early repayment charge, if done so within 3 years of the event occurring.
Aviva Equity Release Incentives
Aviva’s Lifetime Flexible Option incentives include a free valuation offer on property values of upto £1million, or up to £1,000 cash back plus exclusive reduced interest rates (APR’s are dependent on personal criteria).
