Aviva shakes up equity release policy

Aviva shakes up equity release policy

Aviva has made changes to its lifetime mortgages, simplifying the application process and introducing a single set of product terms and conditions.

The lender’s aim is to make equity release, an increasingly popular form of funding in later life, more accessible to a wider range of customers.

The company hopes the changes will make it easier for advisers to complete and submit business requests, resulting in a faster turnaround.

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Under the new terms customers wishing to downsize will be able to redeem their loan in full after three years without having to pay an early repayment charge, if they move to a property that does not meet Aviva’s lending criteria.

This compares to a five-year waiting period before people can downsize more typically available in the market.

The lender also expanded its lending criteria and will consider lending to consumers who want to rent out a self-contained part of their property or who use their property for a limited amount of commercial use, provided the space is less than half the property.

Alongside this, a new specialist service will support applications for larger loans up to £10m on higher value properties.

Greg Neilson, retirement managing director at Aviva, said: "I am delighted to announce these enhancements to our equity release proposition.

"For many people in retirement the value in their home will be their largest asset — our previous research has shown almost seven in ten over-45 homeowners said their property is worth more than their pensions, savings and investments combined. 

"There are a number of wider issues facing people nowadays to which equity release can help to provide a solution, such as helping younger generations struggling to get on the housing ladder, enabling people to remain in their own home with home adaptations, or paying for care beyond that provided by the state."

Will Hale, chief executive of Key, the UK’s largest equity release broker, said: "Today’s announcement by Aviva that they will be making changes to their criteria is to be welcomed.

"Some of these changes will bring their products in line with others in the market while others reflect the requirements of an increasingly diverse range of customers that are looking to use their housing equity to meet their wants and needs in later life. 

"The changes to the larger loan criteria is also a step forward and reflect the fact that some customers may be extremely wealthy with regard to assets but lack the flexibility of having accessible cash to help children or to support the lifestyle they aspire to.

"Innovation from lenders in this market is essential as it means that, when accompanied by specialist advice, the sector can help a wider range of customers than ever before."

Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, said it was vital that providers kept adapting to a quickly changing market.