Aviva began offering equity release products in 1998. Since the company’s entry into the marketplace they have helped more than 198,000 UK residents obtain retirement products. With several options available Aviva has recently updated their products to meet industry demands by offering a voluntary repayment plan. This plan fits the Equity Release Council Code of Conduct Standard, is part of the Safe Home Income Plan and meets all Financial Conduct Authority regulations.
Voluntary Repayment Option
Aviva started offering a voluntary repayment plan to meet industry demands. This plan is a flexible roll-up lifetime mortgage with repayment options. The homeowner can make repayments of up to 10% per year based on the original loan amount. This repayment can include principle and interest. The repayments are possible without any early repayment fees. Aviva only allows up to 4 repayments to be made each year instead of making a monthly repayment of interest or capital and interest.
Aviva has an option to attach inheritance protection to their equity release products. This built in protection reserves a percentage of home equity from being calculated in the loan to value percentage. It does lower the maximum funds available; however, it protects some of the equity for inheritance. Since this is a voluntary repayment option, it is also possible to repay the loan in full before end of life or move to long term care which can also protect the entire home from being sold for repayment later on.
To adhere to industry regulations, Aviva has a no negative equity clause built into their lifetime mortgages including the voluntary repayment plan. The clause states that the loan cannot exceed the equity in the home based on loan amount plus calculated compounding interest. If the home depreciates and does not cover the loan value in full the company cannot seize further assets to repay the loan.
Qualifications and Other Criteria
This Aviva plan is available from the age of 55, where the youngest homeowner on the title must be a minimum age of 55 to qualify for the loan. Aviva does not have an upper age limit. The product is available in the UK including Northern Ireland, Wales, Scotland and England.
Property value requirements are set at £70,000. For a lump payment a minimum of £10,000 is required. This product can also be a drawdown mortgage, so the minimum is the same, but there can also be a cash reserve facility. Under the cash reserve facility a homeowner must take subsequent withdrawals of £2,000. No fees apply to set up additional cash withdrawals.
Under the voluntary repayment option it is possible to repay the entire loan and interest within 16 to 17 years. By opting into the voluntary repayment plan and paying 10% per annum, a homeowner does not have to worry about an inheritance for their beneficiary. As long as the repayment is made in full the home can be kept in the family.
Aviva’s Voluntary Repayment Plan has a free valuation and up to £1,000 cash back. Aviva allows 10% annual repayment without any penalties.
*£5 application available until further notice.
The above rate is based on a male age 62, living in BS11 with a property valued at £215,000 releasing £32,000 initially with £15,150 in a reserve.