I have been recommending Aviva lifetime mortgages for years - in fact, they are the longest-standing equity release lender! But are their plans any good, and how do they compare to the competition?
Aviva offers the most popular type of equity release, a lifetime mortgage. All Aviva lifetime mortgages meet the Equity Release Council standards and afford you their protections. Aviva is one of the most flexible equity release lenders in the market.
Let's review:
Aviva offers variable live pricing, meaning that it offers the best interest rate for the specific amount of money that you need.
Aviva typically offers some of the most competitive equity release interest rates in the market, especially for clients with medical conditions or certain lifestyle factors (including smokers and clients with high blood pressure). However, other lenders often provide more money at lower interest rates.
The interest rate available with Aviva is based on:
- Your age(s)
- Your gender
- Your property address
- The amount of money that you need
- The reserve facility required
- Your health and lifestyle
Please complete the equity release calculator below to find out your personalised interest rate. One of our experienced equity release advisors will request your personalised interest rate and compare it to other equity release plans from across the market.
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Aviva offers some of the most flexible propositions in the market, and I have often recommended them. In fact, last year, Aviva ranked in the top three equity release lenders we recommended.
Aviva offers the most popular type of equity release plan, the lifetime mortgage. Let's explore some criteria and features in greater detail:
Flexible
lifetime mortgage |
| Minimum age 55 |
| No maximum age |
| No affordability assessments |
| Minimum property value £75,000 |
| No maximum property value |
| Minimum loan £15,000 (£10,000 + £5,000 for drawdown plans) |
| No maximum loan amount |
| Add a cash reserve to access money later |
| Optional payments of up to 10% each year |
| Downsizing protection |
| Significant life event waiver |
| Fixed or variable early repayment charges |
| Free valuation on initial advance |
When you are looking to make a joint application, Aviva also offers a significant life event exemption. This exemption affords you the flexibility to repay the mortgage without penalty within three years of the death of the first borrower, or the first borrower entering permanent long term care. I have found this feature a high-value proposition when advising clients who are looking to make a joint application.
In 2019 Aviva also added a downsizing protection feature to their lifetime mortgages. This allows customers to repay the mortgage without penalty if you are looking to move to a property which does not meet Aviva's lending criteria. This feature becomes available to all new clients whose lifetime mortgage has run for a minimum of three years. Most other lenders offering a similar exemption would typically only apply this after five years of the lifetime mortgage being in place.
Aviva allows you to make voluntary repayments on your lifetime mortgage up to a pre-agreed amount each year. Aviva states "Each year, the maximum amount you can repay is 10% of the initial amount you have borrowed. If you borrow more or borrow from your cash reserve, you can also repay up to 10% of those amounts each year."
There have been times when I have sat with clients who have planned to use this very feature. One couple, in particular, was planning on using the lifetime mortgage to fund a new kitchen. Due to their age and income, they were unable to obtain an unsecured loan with a reasonable interest rate, but with the lifetime mortgage from Aviva, they were able to borrow money cheaply, and make repayments as and when they had the money. They were planning on clearing the balance in full over 14 years.
From an underwriting standpoint, Aviva has continued to strengthen their proposition by considering types of property that other lenders wouldn't. They state:
We now lend on properties that have an element of personal commercial use (under 50% of the total property to be secured)
This means they can now lend on:
- Properties with a small home-based business
- Homes with a tenant, with a suitable tenancy agreement
- Homes where one or two rooms within the main home or a self-contained part used for B&B and holiday lets (inc Airbnb)... guest stay mustn't be beyond 30 consecutive days
- Houses with land and buildings in personal agricultural or equestrian use
Changes also include an increased range of property types from historic to modern methods of construction, including:
- Modern Eco homes
- Thatched properties including grade I and II* and many historic building techniques
- Basement flats
- Studio flats
Aviva's equity release proposition is strong and is one that I have recommended time and time again.
Instead of having standard pricing tiers like every other lender, Aviva offers bespoke pricing. To obtain an interest rate from Aviva, you have to provide them with the exact amount you wish to borrow now, along with the amount you would like in reserve later. As a result, you can find a "sweet spot" whereby they may be offering a far cheaper, and therefore more appropriate offering.
Above the initial advance and reserve facility, Aviva also offers the opportunity to add cashback to their plans. I have seen in the past that it can often be cheaper to add cashback rather than increasing the initial advance.
Another valuable part of Aviva's equity release pricing is that they take into consideration your health and lifestyle. There is a simple set of questions to complete, which could mean that you could both borrow more money and also obtain a lower interest rate.
If you are looking for a larger release and there are cheaper alternatives from other providers, Aviva will also consider price matching.
Aviva's interest rates are some of the lowest in the market, and they do not charge any arrangement fee. Aviva plans can work out to be a very cost-effective way of raising money for many borrowers aged 55 and over.
If you own property in Northern Ireland, Aviva is currently only one of two lenders who will consider your property for a lifetime mortgage.
Aviva is the only equity release lender that allows you to add a reserve in the future. With most lenders, additional borrowing is limited to lump-sum only. However, Aviva will allow you to take an additional lump-sum plus add a reserve facility to draw from later.
Aviva is also a big brand! While other lenders who are members of the Equity Release Council offer the same protections, many clients like the fact that Aviva is a well-known brand that they trust.
There is no such thing as the perfect equity release plan, and Aviva lifetime mortgages are no exception. While for the majority of clients, Aviva does have a strong product offering, there is one part of the offering, which for me is not as strong as some other lenders.
Aviva offers all their lifetime mortgages with GILT based Early Repayment Charges (ERC's). These only apply if you pay back more than the 10% yearly allocation outside of any exception, before the natural end of the plan (upon the death of the last borrower, or the last borrower entering long term care). In such instances, Aviva will look at the yield rates for a particular GILT (GILTS are a type of government bond), and if they have performed well, you may pay zero charges for repaying early. However, if the GILT yields have performed poorly, you could pay up to 25% of the amount you borrowed as a penalty for repaying early.
This unknown variable makes Aviva's equity release plans with variable rate ERC's unsuitable for certain types of clients.
In the second half of 2021, Aviva launched Fixed Early Repayment Charges (ERC's) on new plans. There are no additional fees, and the interest rates are the same as their variable rate ERC plans.
Aviva's fixed Early Repayment Charge (ERC) equity release plans
If you make a payment over the 10% pre-agreed allowance, the following ERC will be levied on the amount repaid:
| Year(s) |
Early Repayment Charge |
| 1 |
9% |
| 2 |
9% |
| 3 |
8% |
| 4 |
7% |
| 5 |
6% |
| 6 |
5% |
| 7 |
4% |
| 8 |
3% |
| 9 |
2% |
| 10-15 |
1% |
| 16+ |
0% |
If you considered Aviva in the past but were put off by their early repayment charges, they could now be a great option for you.
Aviva also limit the amount of money that you can hold in a reserve facility to 50% of the maximum loan. If you are looking at taking a small initial amount of money but require a large reserve facility we often find other lenders are more suitable.
As covered above, Aviva plans are designed to fit for the masses. However, there are certain types of client who from my experience, I am more likely to recommend an Aviva equity release plan. Let's run through some examples of prime Aviva clients:
Example 1
Jane is 67 years old and lives in a three-bed semi-detached house. The property is of standard construction, and it is in a good state of repair.
She plans to stay in her home until she either goes into long term care or passes away.
Jane is a smoker, is a diabetic, and is on medication for high blood pressure. These conditions qualify her for a lower interest rate on her borrowing.
Jane is looking to borrow £25,000 for home improvements, and would also like to have a further £25,000 to access in the future to top up her income.
Example 2
John and Jane are 63 and 61, respectively. They live in a four-bed detached house which is in good repair and is built with standard construction.
They are looking to take £50,000 equity release now to gift to their two children as an early inheritance, but plan to make repayments before they reach retirement. They are planning to downsize in ten years and are unsure at present if they will repay their equity release, or take it with them to their new property when they move.
Both John and Jane are in good health and expect to retain their equity release plan for as long as they live if they do not move.
John and Jane are recommended an Aviva equity release plan as it allows them the flexibility to make ad-hoc repayments as they wish. They are also able to port their equity release plan to a new property in the future or are able to repay without any early repayment charges (providing they keep the plan for at least three years).
Another useful feature is the significant life event exemption. While both John and Jane are not planning to trigger any early repayment charges, the addition of the significant life event exemption is of good value to the couple. As they agreed that they were unlikely able to afford to maintain their home if it were just one of them residing.
Example 3
John lives in a two-bed terraced house which was built in the mid-'30s. The property is of standard construction; however, he was previously rejected by two other lenders as he runs a small bed and breakfast from home.
He is looking to take the maximum possible to help with ongoing daily living costs throughout retirement; split between an initial advance and a pre-agreed reserve facility. He has no children so is not concerned about inheritance. He does not wish to make any repayments whilst he is living at the property and plans to reside for the remainder of his life.
Whilst Aviva does not typically lend the highest amounts of money; they are one of the most flexible lenders with their property underwriting.
The Aviva lifetime mortgage is the recommendation, with the addition of cashback to help squeeze the maximum out of the release.
Aviva is one of the most popular equity release lenders. Benefits of their plans include:
- Flexible underwriting
- Downsizing protection
- Significant life event waiver
- Inheritance protection
- Reserve facilities, and
- Medically underwritten plans.
However, you may be able to achieve larger loans and lower interest rates from other equity release lenders
When you are ready, you can book an appointment with one of our equity release advisors, who can show you how Aviva compares to other lenders for your specific needs.
If you have an existing equity release plan with Aviva, we can help you assess the best way to borrow additional funds.
Where you have a reserve facility in place (from a drawdown plan), you can contact Aviva directly on 0800 158 4177 to request additional funds.
However, I always suggest that you compare additional borrowing with Aviva to the cost of moving to a different lender.
We will require your authority to discuss your existing plan with Aviva. Please complete the form below so that we can send you a Letter of Authority to complete, sign, and return so that we may speak with Aviva.
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Why don't I just go to Aviva directly?
Of course, you can go to Aviva directly to request their lifetime mortgages. However, you still require financial advice before taking one of their plans, and they do not currently have any directly employed advisors. Instead Aviva will put you in touch with a financial advisor who will only advise on Aviva equity release plans.
If you chose to work with an advisor who works with other lenders, you could be able to access a more suitable lifetime mortgage from another provider.
But won't I get a better deal by going direct?
The interest rates charged, and the amounts of money you can release will be the same regardless of if you go direct, or through another advice firm.
In closing
I hope that I have provided you with an understanding of Aviva's equity release product offering. And hopefully, you have an idea whether you could be an Aviva equity release client. If you have further questions surrounding Aviva's equity release plans or would like to see if Aviva is the plan I would recommend for you, contact us on 0207 158 0881.
Remember we compare plans from other equity release lenders too, so we can save you time shopping around, and find the most suitable plans for you.
If you have further questions, why not speak with one of our qualified advisors?
Call us on 0207 158 0881 or use our online form to book your FREE consultation.
While a qualified equity release advisor has written this guide, it is not intended to be used as financial nor legal advice and should not be relied upon.
To understand the full features and risks of an Equity Release plan, ask for a personalised illustration.
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