Aviva today announce an exclusive 5.92%pa interest rate to Equity Release Supermarket on its Lifestyle Flexi plan.
News had it that 2012 was going to be a breakthrough year for the Equity Release Market. Today this statement was confirmed.
The first sub 6% annual interest rate for over 5 years will have a major impact on the equity release market & confidence in general.
Ironically enough, this followed news earlier in the day from Just Retirement that it had just reduced its own rate in reaction to Aviva’s a week earlier. The new Just Retirement rate of 6.15% pa was considered extremely competitive until Aviva gatecrashed their party later on in the day.
Today’s groundbreaking news on the Aviva Lifestyle Flexi plan has come hot on the heals of my previous news items of 27th January & 30th January in announcing earlier Aviva and LV= rate reductions.
So why is there such an equity release interest rate war currently?
We need to look at the market as whole, the recent economic factors & how these companies are funded.
Both Aviva & Just Retirement are big annuity providers & companies with the backing of annuities have been able to ride the storm, ever since the credit crunch began a few years ago. You may be aware that most equity release companies with bank funding such as Saffron, Coventry Building Society & Hodge Lifetime to some degree, have dropped out of the market. Longer term funding has been an issue for them.
However, this doesn’t answer the whole story, so lets look a bit deeper…
We have mentioned the credit crunch. It is evident first hand from our Equity Release Supermarket data that a significant element of equity release loans are for financial, rather than lifestyle factors. This means there is a greater emphasis on ‘need’ rather than ‘wants’.
Retirees in general are finding retirement a financial struggle in trying to make ends meet. Overall attitude towards retirement & their legacies has also changed over the years with a more ‘live for today’ motto. With drawdown equity release plans becoming increasingly popular, this lends true to our analysis.
People are taking just enough for today to clear debts, help the kids & have a small amount behind them to provide that ‘cushion’ that provides them with a feel good factor.
The Aviva Lifestyle Flexi Deal in Finer Detail
Market leading fixed interest rate of 5.92%
£500 cashback on completion
FREE valuation upto £1 million
Drawdown equity release scheme
Earliest age for application of 55 years
Minimum £10,000 initial loan
Minimum property valuation of £75,000
In addition to the great news on their lowest interest rate for years, now is as good time as any to take out an Aviva Equity Release Plan. With both a £500 cashback & free valuation offer, the net set up costs for an equity release application are now minimal. With Equity Release Supermarket’s advice fee being lower than its major competitors, then now is the time to seriously considering taking out an equity release plan with Equity Release Supermarket, if you have strong intentions to do so anyway.
Early Repayment Advantages with Aviva
With GILT rates at a current all time low, it would also favour equity release lenders who use gilts to govern their early repayment charges. Aviva use an individual government gilt to measure whether a future early repayment charge will apply. The yield of this gilt is noted on the day the equity release plan starts. Upon redemption, the yield is noted at that point & gauged to see whether it has it increased or fallen during that period.
Should the gilt yield have increased or stayed the same then NO penalty will apply. Aviva will even permit a reduction of 0.12 basis points before even applying a penalty. Therefore, with gilt rates currently being so low, there is less likelihood of the yields falling today than ever previously. However, this cannot be guaranteed & if you are considering early repayment then please speak to our team of advisers first.
With a national team of equity release advisers who can provide both face-to-face & phone based financial advice, we are only a telephone call away from offering you a market leading equity release deal.
If you would like to take advantage of a free initial consultation regarding the Aviva or any other equity release mortgage, please call the Equity Release Supermarket team on 0800 678 5159 or email email@example.com.