Aviva equity release review
If you’re considering equity release, we look at what Aviva has to offer and whether it’s the right provider for you.
Like many older people, you may be asset rich but cash poor, with most of your wealth tied up in your home but not enough cash to do the things you want to do, and you don’t want to sell your home. Equity release is one way to solve this but you should think carefully before going ahead and choose your product wisely. Find out whether Aviva equity release is the one to choose.
What is Aviva equity release?
Equity release is a way of unlocking the equity in your home without moving to give you cash to spend. You borrow the money from a provider such as Aviva and the loan is paid off when you (and your partner if you have a joint mortgage with them) die or have to move into long-term care. There are no repayments to make before then and you still own your home.
You may want to spend the money on home renovations, boosting the money you have to spend in retirement, going on holiday, helping your children buy a home or paying off an interest-only mortgage.
What products does Aviva offer for equity release?
There are two main types of equity release: lifetime mortgages and home reversion plans. Aviva only offers lifetime mortgages.
It has two options: Lifestyle Lump Sum Max, where you borrow a one-off sum from £15,000 upwards; and Lifestyle Flexible Option, where you borrow an amount from £10,000 and then have a cash reserve of at least £5,000 to draw on as you wish. You only pay interest on the money you’ve withdrawn.
How does it work?
You don’t make monthly repayments as with a regular mortgage but interest is added to your loan amount each year. The interest rate you pay depends on your circumstances, including your age, health and the value of your home, and is fixed with Aviva.
The loan plus the interest that has built up is paid off when you die or go into long-term care, usually from the sale of your property.
Is equity release safe?
Equity release will have a significant impact on your finances and may affect what tax you have to pay and the benefits you are entitled to, so it shouldn’t be undertaken lightly. You should seek financial advice as well as legal advice to decide whether it’s right for you. You should also consider other ways of releasing the cash, such as downsizing to a cheaper property or cashing in investments, first.
As the interest you pay is compound interest, which means that every year interest is calculated on the total amount you owe including the interest from the previous year, the amount you have to pay back increases quickly. The younger you are when you take out equity release the bigger the debt is likely to be when the time comes to pay it off.
This means there may not be much money left over when the loan is eventually paid back following the sale of your property and the amount you can leave as an inheritance may be greatly reduced. The amount will also be dependent on house prices at the time.
Eligibility criteria for Aviva equity release
To apply for an equity release product with Aviva you need to be aged 55 or over and a homeowner. If you have a partner you need to be joint owners of the property and they also need to be 55 or over. Your home needs to be your main residence.
Your property has to be in the UK and worth at least £75,000 and you’ll need to borrow at least £15,000 and have a home that lets you do this. How much you can borrow depends on your age and the value of your property as well as the specific product you choose, although you may be able to borrow more later on.
How to apply
Speak to a financial adviser before going ahead with Aviva equity release. You can either contact advisers it has selected (visit the Aviva website for details) or find your own, for which you’ll pay a fee.
As a member of the Equity Release Council, Aviva equity release has safeguards in place, such as a no-negative-equity guarantee, so the amount you owe will never be more than the proceeds of the sale of your property (after fees), to reduce the potential risks. It also offers fixed interest rates so you always know the rate you’ll be paying.
However, equity release should still only be taken out once you have explored alternative ways to release cash and have looked at all the implications carefully to make sure it’s right for you.
Frequently asked questions
More guides on Finder
Equity release glossary
See through confusing industry jargon with these dictionary definitions.
Best second charge mortgages of December 2020
Second charge mortgages can allow borrowers to finance big projects, like home improvements. However they come with risk, so it’s crucial to read-up, do your sums and work out what’s right for your circumstances.
How to get a £200,000 loan
If you’re considering applying for a £200,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.
How to get a £150,000 loan
If you’re considering applying for a £150,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.
How to get a £100,000 loan
If you’re considering applying for a £100,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.
Best buy-to-let mortgage
If you’re in need of a buy-to-let mortgage, this guide looks at how you can find the best one for your circumstances.
Best way to invest £50,000
Wondering what to do with £50k that has just dropped into your lap? Read our guide for some thoughts on how to spend it well.
Compare the best mortgage deals of December 2020
Everything you need to know about getting a cheap mortgage with the lowest rate and fees.
Aviva pensions review
Is Aviva the right pension provider for you? We analysed its offering to give you the information you need to know before moving your pension.
Equity release options for under-55s
If you’re under 55 and can’t access products such as lifetime mortgages and home reversion plans, read our in-depth guide on ways to release equity from your home.
Ask an Expert