Freedom and cost-effectiveness - helping your clients live life to the full
Our Lifestyle Flexible Option lifetime mortgage offers the flexibility of a cash reserve from which your clients can draw their money as and when they need it. It’s often a cost-effective option as your client only pays interest on the cash they draw down.
Alternatively, your client can borrow a one-off cash sum of £15,000 or more tax-free.
The amount of the loan available depends on factors, such as their age, their health and lifestyle and the value of their property. No repayments are normally needed, as the loan's usually repaid in full from the sale of the property when your client dies or moves into long-term care, subject to our terms and conditions.
Certain health or lifestyle conditions mean a lower interest rate or higher loan to value
Your client still owns their home and can live there until they die or move into long-term care, subject to our terms and conditions
The amount owed can quickly increase, which will reduce the amount of inheritance your client can leave
Why Lifestyle Flexible Option?
Our lifetime mortgage Lifestyle Flexible Option offers either a one-off cash lump sum of £15,000 or more, tax-free or a one-off cash lump sum with the flexibility of a cash reserve from which your clients can draw their money as and when they need it. This is often a cost-effective option as your client only pays interest on the cash they draw down.
Your client will still own their home and can live in it until they die or move into long-term care, subject to our terms and conditions. This applies to both borrowers on joint lifetime mortgages.
Your clients should be aware that during the mortgage term, interest is charged on the amount borrowed plus interest already added, which can quickly increase the amount owed. They won't have to pay tax on the amount they release, but it may affect their tax position and eligibility for certain welfare benefits. It will also reduce the amount of inheritance they can leave.
Great benefits as standard
- Your client receives an initial lump sum to spend as they choose
- No need to make any repayments during the loan term under normal circumstances (terms and conditions apply)
- Interest rates are guaranteed for 14 weeks as detailed on your client's offer
- No upper age limit - anyone aged 55 or over can make use of the equity in their home
- Online access - you and your client can see up-to-date policy details 24/7
- Downsizing protection is a standard product feature which allows a client to move to a property that doesn't meet our lending criteria and repay their lifetime mortgage in full without paying an early repayment charge (terms and conditions apply)
Additional funds when they’re needed if a cash reserve is chosen
- Minimum drawdown of £500 from client's cash reserve
- They can leave up to 50% of the total amount they borrow in their cash reserve
- Minimum total loan of £15,000 (an initial loan of £10,000 with a reserve of £5,000)
- No interest is payable until the money’s released
- The interest rate on each release will be that which is current at the time and will be individually tailored to their circumstances
Peace of mind
- No-negative-equity guarantee - your client (or their estate) won’t have to pay back more than the property sells for, as long as it's sold for the best price reasonably obtainable
- Optional inheritance guarantee - your clients may be worried that the inheritance they leave will be reduced, but this guarantee allows them to safeguard a percentage of their home’s value
- Voluntary partial repayment - allows your client to repay 10% of the initial amount borrowed each year. If the client borrows more or borrows from their cash reserve they can also repay up to 10% of those amounts each year
- Moving-home option - your client may be able to transfer their lifetime mortgage to a new home as long as it meets our lending criteria at the time
- Your client may be able to borrow more in the future, though we can’t guarantee this and again it would depend on our lending criteria at the time
- Clients with certain health or lifestyle conditions could benefit from lower rates of interest or a higher loan to value.
Facts and figures
· Minimum age 55
· No maximum
· For joint policies both applicants must be at least 55
· Minimum value £75,000
· No maximum
· With flats and maisonettes, 85% of the property’s value is used when calculating the loan.
· £15,000 to £1,000,000.
· If the cash reserve option is chosen, a minimum total loan of £15,000 with at least £10,000 is taken straightaway (remainder in cash reserve)
· We consider larger loans on request
Loan to value (LTV) – single applicant
· Minimum 25%, minimum age 55.
· For clients aged 85 and over the maximum LTV is 50.4%.
· For more information about our LTVs (including possible enhanced rates which depend on your client's health and lifestyle) read our adviser guide
|Loan to value (LTV) – joint applicants|| |
- Minimum 21.5%, minimum age 55.
· For clients aged 85 and over the maximum LTV is 47.4%.
· Minimum withdrawal £500
· No maximum withdrawal
· No cap on number of withdrawals
· The most clients can leave in the cash reserve is 50% of the maximum amount they can borrow. Minimum amount to set a cash reserve is £5,000. If there is less than £500 in the reserve, the full amount must be taken at the next withdrawal
Voluntary partial repayments
· Minimum £50
· Maximum 10% of total amount borrowed
· Each year clients can repay up to 10% of the amount they've borrowed
· If your client borrows more at a later date, or draws money from their cash reserve, they can also repay up to 10% of each of those initial loan amounts each year
· The minimum they can repay in each instalment is £50
· Only available to clients who applied for their lifetime mortgage from 28 April 2014 onwards
Early repayment charge
Gilt-index early repayment charges
Maximum 25% of each amount borrowed
Fixed early repayment charges
· This may be charged if a client wishes to repay the loan in full before they die or need long-term care. The charge may apply to each amount the client has borrowed. The charge doesn’t apply in certain situations – see terms and conditions for details
· For joint applicants who applied for their lifetime mortgage from 28 April 2014 onwards, there is no early repayment charge on first death
· If you'd like more information about how our early repayment charges work you can download a brochure from our website:
Gilt index early repayment charges
For variable individual gilt-based early repayment charges explained (for all customers who applied for their lifetime mortgage before 21st October 2021 and all customers who chose a gilt-based ERC between 21st October 2021 and 13th December 2021) read our Variable individual gilt-based early repayment charges explained.
For variable gilt index early repayment charges explained (for all customers considering, applying for, or who received an illustration and applied for a lifetime mortgage on or after 13th December 2021) read our Variable gilt index early repayment charges explained.
For fixed percentage early repayment charges explained read our Lifetime mortgage fixed ERCs explained.
· The property must be in England, Wales, Scotland or Northern Ireland (it can’t be in the Channel Islands or Isle of Man). It must be your client’s main residence and must meet our lending criteria. If the property is leasehold, the sum of the years remaining on the lease plus the age of the youngest borrower must equal at least 160 years
Fees and charges
Here we summarise some of the charges and fees your clients may need to pay. For full details please download our Tariff of Charges.
Calculated daily and compounded annually.
Shown in your client’s Key Features Illustration.
Early repayment charge
May apply if the loan is repaid for any reason other than those mentioned in our terms and conditions. More information on these charges can be found in the Facts and figures section.
Gilt-index early repayment charges
The charge could be up to 25% of the loan value, including any additional borrowing or cash reserve releases. There may also be an administration fee.
Fixed early repayment charges
The charge is a fixed percentage of the initial loan and each subsequent loan including interest accrued up to the date of repayment, depending upon how long the customer has had each loan.
Your client is responsible for paying their own legal fees. Aviva's legal costs and any disbursements are covered by the arrangement fee.
2.25% of the initial loan plus 0.75% of the reserve if a cash reserve option is chosen.
If an application takes more than 6 months to process, your client will need another property valuation.
£60 if the home needs to be inspected again - for example after essential repairs have been carried out.
Additional borrowing fees
|Please download our additional borrowing brochure for applications from 28 April 2014 onwards.|
|Valuation fees||No upfront valuation fee on initial borrowing if the estimated value of the property is up to and including £5 million.|
Lifetime mortgages are one solution to a number of wider issues facing customers and the UK more widely, including, for example:
- Helping a younger generation struggling to get onto the housing ladder – releasing value locked in older generation's houses
- Quality of life – remaining in their own home and staying independent is a key aim, with home adaptations and paying for care beyond that provided by the state
- Sourcing of later life borrowing where traditional mortgages are not an option – for example to replace interest only mortgages where no repayment vehicle is in place
Lifestyle Flexible Option is designed for clients who:
- Are homeowners aged 55 or over who need to raise capital
- Have no mortgage or can pay off their mortgage with the proceeds of the loan
- Have a minimum property value of £75,000
- Need to borrow at least the minimum £15,000
- Require a fixed rate of interest throughout the term of the lifetime mortgage. However, if a cash reserve is chosen, each release from the cash reserve may have a different fixed interest rate from that charged on the initial loan
- Live in the UK (excluding the Channel Islands and the Isle of Man)
It’s unlikely to be suitable for:
- Clients who have savings or other money they could use first
- Those who would prefer to use a product that lets them release cash by selling all or part of their home
- Those who already have a large mortgage they couldn’t pay off with the proceeds of the loan
- Clients who’d prefer to sell their property and downsize
Things your clients should consider:
- Involving their family in the decision
- For couples, ensuring both borrowers understand the commitment
- The impact on their state and welfare benefits
- Whether releasing equity could affect their tax position
- How releasing equity will reduce the amount of inheritance they can leave
- Ensuring they’re prepared to commit to this for life, as early repayment charges could be expensive
- Understanding the costs involved, particularly the build-up of interest over the term of the lifetime mortgage
Possible alternatives to equity release include:
- Selling or using other assets.
- Local authority or other type of grant
- Taking out a standard secured or unsecured loan, if your client can afford the repayments
- Selling their home and downsizing
- Adjusting their standard of living
- Moving in with children
- Borrowing money from family
- Selling part or all of their home using a home reversion plan
Post-pensions freedom, annuities remain a viable option for many clients, whether they use some or all of their retirement fund. All our annuities come with a 1-year guarantee and 90-day value protection.
For clients who need long-term care for a physical disability or mental impairment. Our plans help to fund care fees for people either currently receiving care or about to receive care.
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