It is easy to give a list of potential percentage of property value results for the maximum Aviva equity release calculations; however, to understand these results fully you need a bit more than the 2014 values. You need to understand how the loan to value percentage is gained. You should also know Aviva is just one company offering products to consumers in England.
Factors of the Calculation
Homeowners need to provide two pieces of information for the calculator to come out with results. The first is age. Age is going to determine the percentage of property value, while the second piece of information, property value, is going to give a result in currency for the amount that can be lent.
The age can be between 55 and 90 years for Aviva products. The younger a person is the lower the loan to value percentage is going to be; therefore, the lower the maximum lump sum is. The older a person is the more they will be able to release.
Why Age is a Factor
The premise of lifetime mortgage products like Aviva’s is to provide a loan without a repayment schedule. Instead, the loan is repaid after the person has died or moved into a long term care facility. When the home is no longer the main residence of the person the loan must be repaid. Before this time arrives, the homeowner is not going to make a payment towards the capital lump sum or the compounding interest. There are products such as the interest only lifetime mortgage, where the homeowner can pay the interest to stop it from accruing.
As the company is providing a loan without expected repayment and with compounding interest, the company has to make sure the total is not going to exceed the property value over time. A person of 65 years of age could have 35 years left to live in their current home. It would mean the loan is outstanding for that period of time without any payment being made. The company is looking for a return on investment, but they are also held to the Equity Release Council‘s ‘no negative equity guarantee’ which states the loan cannot exceed the property value and if it does the homeowner is not responsible for paying the difference.
For this reason the younger a person is the less they will receive. The older the person the more they receive on the assumption it will be returned much earlier than someone younger would be able to.
Current Aviva Age to Percentage of Property Value Figures
The following is a table of current Aviva percentage of property value figures based on age. It shows you the potential maximum percentage available to you for the lump sum plan in discussion here.
Age – Percentage of Property Value
55 – 20.5%
60 – 25.5%
65 – 30%
70 – 36%
80 – 47%
90 – 52%
Now that you have this information you can understand the maximum Aviva equity release calculations. For example, a home worth £200K for a person who is 65 at 30% percentage of property value would receive up to £60,000. A person who is 90 would get closer to half the property value, thus closer to £100k in maximum amount.
Independent Financial Advice
Once you have the calculation and determine if it will work for your needs, you can take on the next step. The main point is to ensure the product can release enough equity to do you any good. If you find the maximum amount is enough, it is best to speak with an independent financial adviser who is qualified to sell and talk about equity release products.
Using an independent source ensures you are getting the best product for you. This is not always possible by talking directly with Aviva or using the Aviva calculator. You may find after research that this is the best plan. However, you also want to make certain you are doing your research in full so that you won’t find out later you could have a product that is better in terms of interest rate or percentage.
The above are just the 2014 options for one product. The maximum Aviva equity release calculations are definitely skewed towards one product. While it helps you determine if Aviva is a product to look at, always make certain you have examined the market, as a whole, before signing any paperwork. You may find something better for your circumstances.