Equity release

Lifestyle Flexible Option

Freedom and cost-effectiveness

This product offers equity release with 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.

Enhanced rates

Certain health or lifestyle conditions mean a lower interest rate or a higher loan to value

Home security

Your client still owns their home and can live there until they die or move into long-term care

Be aware

The amount owed can quickly increase, which will reduce the amount of inheritance your client can leave

Product details

Why Lifestyle Flexible Option?

Our Lifestyle Flexible Option offers your clients freedom and cost-effectiveness. As well as receiving an initial lump sum of £10,000 or more, your client can set up a cash reserve of £5,000 or more from which they can draw money when they need it. This could be more cost-effective than a single lump-sum loan as they’ll only pay 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 from when we get the application form
  • 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

  • Your client can release as little as £2,000 from their cash reserve at one time
  • 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

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. 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

Enhanced rates

  • Clients with certain health or lifestyle conditions could benefit from lower rates of interest or a higher loan to value 

Facts and figures

 

Limits

Additional info

Age

· Minimum age 55

· No maximum

· For joint policies both applicants must be at least 55

Property value

· Minimum value £75,000

· No maximum

· With flats and maisonettes, 85% of the property’s value is used when calculating the loan

Loan amount

· £15,000 to £600,000

· Minimum total loan of £15,000 with at least £10,000 taken straightaway (remainder in cash reserve)

· We consider larger loans on request

Loan to value (LTV) – single applicant

· Minimum 13%, minimum age 55.

· For clients aged 85 and over the maximum LTV is 45%.

 

· 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 12.5%, minimum age 55.

· For clients aged 85 and over the maximum LTV is 45%.

Cash reserve

· Minimum withdrawal £2,000

· 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 £2,000 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

· Maximum 25% of each amount borrowed

· This may be charged if a client wishes to repay the loan in full before they die or move into long-term care. The charge will 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

Residency

 

· 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.

Charge

Details

Interest

Calculated daily and compounded annually.

Arrangement fee

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. 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.

Legal fees

Your client is responsible for paying their own legal fees. Aviva's legal costs and any disbursements are covered by the arrangement fee.

Commission

2.25% of the initial loan plus 0.75% of the reserve.

Revaluation fee

If an application takes more than 6 months to process, your client will need another property valuation.

Reinspection fee

£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

Property value

Valuation fee

£75,000 to £150,000

£153

£150,001 to £300,000

£210

£300,001 to £500,000

£295

£500,001 to £750,000

£480

£750,001 to £1,000,000

£685

£1,000,001 to £1,100,000

£920

£1,100,001 to £1,200,000

£1,120

£1,200,001 to £1,500,000

£1,270

£1,500,001 to £2,000,000

£1,420

Over £2 million

Please contact us for more information

Client suitability

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 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

Quote and apply

Pre-sales support:

For New business and Additional Borrowing Quotations and Pre-Sales Lending Criteria Enquiries:

Email: equityreleasefapresales@aviva.com

Phone: 0800 015 4909

Submitting new business: 

New Business Applications: nbapps@aviva.com

Additional Borrowing Applications: erab@aviva.com

New Business Updates:

For all enquiries relating to submitted applications and client(s) offers:

Email: lpeqren@aviva.com

Phone: 0800 206 2014 Option 2

Existing Business:

Redemption Statements, Reserve Drawdowns, Change in Circumstance, Moving home, LOA

Email: ercicdirect@aviva.com

Phone: 0800 206 2014 Option 1

Business Support:

Request a call back from your regional Business Development Manager:

Email: erbusinesssupport@aviva.com

Agency & Commission:

For all enquiries to relating to agency codes and commission:

Email: ACINFO@Aviva.com

Phone: 0800 015 0967

 

Calls to and from Aviva may be recorded and/or monitored. 

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