Aviva Lifetime mortgage - Lifestyle Flexible Option

Freedom and cost-effectiveness - helping your clients live life to the full

Our Lifestyle Flexible Option lifetime mortgage offers the flexibility of either a cash lump sum or a cash lump sum with a cash reserve from which your clients can draw money as and when they need it. 

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 needs long-term care, subject to our terms and conditions. 

Enhanced rates

Certain health or lifestyle conditions mean a lower interest rate or 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, subject to our terms and conditions

Be aware

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

Product details

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 of £10,000 or more with a cash reserve of £5,000 or more. The cash reserve offers flexibility for your clients to draw 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.

During the mortgage term, interest is charged on the amount borrowed plus interest already added, quickly increasing the amount the client owes. They won't have to pay tax on the amount they release but depending on what they do with the money, there may be tax implications. Releasing equity will reduce the amount of inheritance your client can leave, and may affect their eligibility for certain welfare benefits.

 

Great benefits as standard

  • Your client receives an initial lump sum to spend as they choose
  • Voluntary partial repayments. Each year, your client can choose to repay up to 10% of the initial loan, any additional borrowing and any cash reserve releases without incurring an early repayment charge. There is no limit on the number of repayments that can make this up, but each repayment must be at least £50.
  • Interest rates are guaranteed for 14 weeks as detailed on your client's offer. If the loan does not complete within this time, the case will be reviewed and a reoffer will be issued on prevailing rates which are guaranteed for a further 14 weeks
  • 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.  The lifetime mortgage must have been held for 3 years before downsizing protection can be used. (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. This guarantee allows them to safeguard a percentage of their home’s value for their estate, although this will reduce the amount they are able to borrow.
  • 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

· For leasehold properties the remaining lease length will determine what percentage of the property valuation is used to work out how much your client can borrow.  Read our technical guide for more information.

Loan amount

· £15,000 to £1,000,000.

· If a cash reserve is chosen, clients must take a minimum total loan of £15,000 with at least £10,000 being taken straight away and the remainder to be left in reserve.

· We consider larger loans on request

Cash reserve

· 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

·  The payment methods we accept are BACS, CHAPS, Faster Payments or Direct Card. We are unable to offer a regular repayment method

· Only available to clients who applied for their lifetime mortgage from 28 April 2014 onwards

Residency

The property must be in England, Wales, Scotland or Northern Ireland (excluding the Channel Islands or Isle of man)

The property 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.  Lease lengths with a remaining term of less than 75 years will be declined regardless of the youngest borrower's age.

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.

Fixed Percentage - early repayment charge

An early repayment charge may apply if your client wishes to repay their loan in full before they die or need long-term care, subject to our terms and conditions .

The early repayment charge is a fixed percentage of the initial loan and each subsequent loan, including interest accrued up to the date of repayment. The percentage applied depends on how long your client has had the loan for.

For more information on our fixed percentage early repayment charges and when a charge doesn’t apply please read our Lifetime mortgage fixed early repayment charges explained

The table below shows the current fixed early repayment charge percentage rates:

Year loan is repaid Early repayment charge
1 9%
2 9%
3 8%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
Years 10 to 15 1%
Year 16 or later 0%
Variable Gilt-Index - early repayment charge 

An early repayment charge may apply if your client wishes to repay their loan in full before they die or need long-term care, subject to our terms and conditions

The early repayment charge will be no more than 25% of the total amount borrowed and linked to movement in the UK FTSE Actuaries 15 Year Gilt Yield Index.

For more information on our Variable Gilt-Index early repayment charges and when a charge doesn’t apply please read our Variable gilt-index early repayment charges explained

Variable Individual Gilt - early repayment charge

 

Replaced by Variable Gilt-Index and no longer available to new customers

An early repayment charge may apply if your client wishes to repay their loan in full before they die or need long-term care, subject to our terms and conditions .

The early repayment charge will be no more than 25% of the total amount borrowed and linked to movement in the individual gilt which has been assigned to each loan as shown in the completion letter.

For more information on our Variable Individual Gilt early repayment charges and when a charge doesn’t apply please read Variable individual gilt based early repayment charges explained

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 if a cash reserve option is chosen.

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 No upfront valuation fee on initial borrowing if the estimated value of the property is up to and including £5 million.

Client suitability

In July 2022, the FCA strengthened the requirements in relation to product oversight and governence following introduction of the Consumer Duty regulations (PS22-09). For information about client suitability, you can read our Target Market Statement

 

Lifetime mortgages are one solution to a number of wider issues facing customers and the UK more broadly, 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

If you are submitting an initial borrowing application online, you can find more support in our article What you need to know about the Consumer Duty Target Market for equity release

Quote, apply and track initial borrowing cases online

Visit Equity Release online services

Related products

Annuities

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.

Lifetime Care

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.

Haven't found what you're looking for?

See our contact us page for a full directory.