Aviva Equity Release A guide to our lifetime mortgages. Lifestyle Lump Sum Max Lifestyle Flexible Option

Transcription

1 Aviva Equity Reease A guide to our ifetime mortgages Lifestye Lump Sum Max Lifestye Fexibe Option

2 Contents An introduction to equity reease and ifetime mortgages 3 Who might quaify? 4 What you need to do 5 Our ifetime mortgages features and considerations 6 Our ifetime mortgages in more detai 7 Our ifetime mortgages the standard features 9 Our ifetime mortgages optiona inheritance guarantee 11 How much coud you borrow? 12 Understanding the fees 14 What happens if your circumstances change? 16 Making changes to your ifetime mortgage 17 Questions and answers 19 Acceptabe properties 23 Getting advice and hep 24 Putting your mind at rest 25 Gossary 26 2

3 An introduction to equity reease and ifetime mortgages What is equity reease? If you own your property outright or if your property s worth more than any oans you have secured against it, then you ve probaby got equity tied up in your home. Equity reease coud aow you to access some of this money. If you do have equity in your home, you may be considering ways of using it to hep you enjoy your retirement more. A common way of doing this is to se your home and move to a smaer property. However, you may not want to do this it s your home, not just bricks and mortar. Instead, you may find equity reease to be a better way of offering you an improved standard of iving in retirement, without you having to se your home or move. What s a ifetime mortgage? A ifetime mortgage is a form of equity reease that aows you to access the equity tied up in your home. It s a ong-term oan which is secured on your property. Athough it s a mortgage, you don t have to make repayments. The oan is designed to be repaid in fu, usuay from the sae of your property, when you (and your partner for joint ifetime mortgages) pass away or move into ong-term care, as defined in our terms and conditions. That s why it s caed a ifetime mortgage. You continue to own your property. When reading through this guide you may come across some terms you re not famiiar with. We ve highighted these in bod and itaics and provided a gossary at the end of the guide to expain what these terms mean, which you may find usefu. 3

4 Who might quaify? You coud be eigibe if you: Are aged 55 or over you must be 55 or over to take out a ifetime mortgage. If you re married, in a civi partnership, or co-habiting you must both be aged 55 or over, own your home and take out the ifetime mortgage together. You can transfer ownership into joint names on competion if you need to. We use the age of the youngest borrower to work out the oan amount. Live permanenty in your home the property must be your main residence and you must not eave it unoccupied for more than six months at any one time. Ony have a sma mortgage or are mortgage free you must pay your outstanding mortgage off before or at the same time as taking out the ifetime mortgage. You can use the money you borrow from us to do this. Own a property vaued at 75,000 or more which is your main residence for fats and maisonettes we ony use 85% of the vauation to work out how much you can borrow. Wish to and are abe to borrow at east 15,000. See page 12 of this guide for an estimate of how much you may be abe to borrow. Live in Engand, Scotand, Waes or Northern Ireand not incuding the Channe Isands or the Ise of Man. Own a home that s: freehod or if you ive in Scotand feuhod, ex-feuhod or freehod, or easehod properties the sum of the years remaining on the ease pus the age of the youngest borrower must equa at east 160. For exampe, if the youngest borrower is 65, at east 95 years must be eft on the ease. For detais about the types of property we won t accept see page 23 of this guide on acceptabe properties. This is a ifetime mortgage. To understand the features and risks ask for a personaised iustration. 4

5 What you need to do Taking out a ifetime mortgage is a ong-term commitment and isn t suited to everyone s individua needs. You must receive financia and ega advice and we aso suggest invoving your famiy before making your fina decision. Tak to a financia adviser A financia adviser can hep you decide whether a ifetime mortgage is right for you. They wi be abe to tak you through a your options. Equity Reease can ony be provided through an advised sae, so if you don t aready have a financia adviser you can find one near you at See page 24 of this guide for more detais. Speak to a soicitor You woudn t think of buying a new home without appointing a soicitor. It s no different if you re thinking about taking out a ifetime mortgage. It s important you appoint a soicitor to act on your behaf to carry out searches and dea with the Land Registry, etc. We suggest appointing a soicitor who is a member of the Nationa Soicitors Network. See page 24 of this guide for more detais. Invove your famiy We suggest that you tak with your famiy about equity reease as it s important that they understand and support your decision to reease cash from your home. When you meet with your financia adviser, you can take members of your famiy with you, so that they re fuy invoved right from the start. Your adviser wi be abe to answer your questions and expain how equity reease works and what to consider. 5

6 Our ifetime mortgages features and considerations We offer two different types of ifetime mortgage to hep you unock the equity tied up in your home Lifestye Lump Sum Max and Lifestye Fexibe Option. With both options you continue to own your home and ive in it unti you (and your partner in the case of joint ifetime mortgages), pass away or move into ong-term care, as defined by our terms and conditions. What are the benefits? Things to consider A cash ump sum. Continue to own and ive in your home. The possibiity of reeasing further cash in the future. A no negative equity guarantee. See pages 9 and 25 for more detais. Our optiona inheritance guarantee ensures you can eave an inheritance to your famiy. Our vountary partia repayment feature ets you pay back some of the money you ve borrowed. See page 9 for more detais. A fixed rate of interest throughout the term of your mortgage. To see how we assess the need for ong-term care and whether the ifetime mortgage needs to be repaid pease refer to our terms and conditions. Interest is added annuay on the amount you ve borrowed on a compound interest basis. This means the amount that you owe wi increase quicky. You don t have to pay tax on the amount you reease. However, equity reease may affect your tax position and your eigibiity for certain wefare benefits. You need to tak to your financia adviser about this, or visit for more information on how this may affect you. A ifetime mortgage is a ifetime commitment. If you choose to fuy repay the pan eary, you have to repay the oan and the interest, and there may be substantia eary repayment charges to pay. See page 16 for more detais. The amount of inheritance you can eave wi be reduced, possiby to nothing. However, you can choose to take our optiona inheritance guarantee. See page 11 for more detais. If you decide to eave, or have eft the property permanenty because you need ong-term care, or if you re a joint borrower and both of you or the surviving borrower move into ong-term care, then you may be required to repay your ifetime mortgage. This is usuay by the sae of your home. 6

7 Our ifetime mortgages in more detai Our ifetime mortgages, Lifestye Lump Sum Max and Lifestye Fexibe Option, come with standard and optiona features that you can use to taior your ifetime mortgage to your own needs. We cacuate the maximum amount you can borrow based on your individua circumstances. We take into consideration the vaue of your property, your age, your heath and ifestye and whether you re appying in singe or joint names. You can find out more about the fees on our ifetime mortgages on page 14 of this guide. Additiona borrowing You may be abe to borrow more ater on if you need to, athough we don t guarantee that you be abe to. You shoud bear in mind that the interest rate is ikey to be different. Here s how our two ifetime mortgages work. We ve aso incuded some iustrative case studies to give you an idea of how you coud use equity reease to make ife easier for you in retirement. Lifestye Lump Sum Max Features Borrow a one-off cash sum from 15,000. Possibiity to borrow a higher amount (oan to vaue) or benefit from a ower fixed interest rate, based on your heath and ifestye. One-off cash ump sum from 15,000 John, 67 and Linda, 65 are both retired. They ive in a cottage, worth 250,000, in a sma viage in the Ribbe Vaey in Lancashire. They have pensions from their previous empoyment and both have a state pension. However, they ve been retired for a few years now and have spent a the tax-free cash they took out of their pension pans when they retired. They now need some money to pay for essentia home improvements and to hep with the rising cost of iving. They d aso ike to visit their daughter and grandchidren in Austraia. They borrow 72,500 as a one-off cash ump sum to pay for the repairs and the opportunity to go on hoiday. 7

8 Lifestye Fexibe Option Features Borrow at east 15,000. Possibiity to benefit from a ower fixed interest rate based on your heath and ifestye. Set up a cash reserve to draw on whenever you want to No need to take a the money at once however, you must take a minimum of 10,000 as your initia oan and set up a cash reserve of at east 5,000. A new interest rate for each draw each time you take money from your cash reserve, we offer you the interest rate vaid on the day you ask to take the money. This may be higher or ower than your previous rate. See page 21 of this guide for more detais. Take as itte as 2,000 from your cash reserve at any one time. Minimum cash reserve of 5,000 if the initia oan you take eaves ess than 5,000 to put into reserve you won t be abe to set up a cash reserve. For exampe, if the maximum you can borrow is 100,000 and you take out an initia oan of 97,000, you d have 3,000 eft and woudn t be abe to set up a cash reserve. Maximum cash reserve of 50% of what you can borrow so if the maximum you can borrow is 100,000, the most you can eave in reserve is 50,000. Once we ve set up your cash reserve, we don t usuay revaue your home. This means that any changes in the vaue of your property woudn t normay affect the amount of cash you have in reserve. However, in exceptiona circumstances we may revaue your home and reduce or cance your reserve. There may be some circumstances when we won t aow you to take money from the cash reserve. Pease read the terms and conditions for more information. Borrow at east 15,000 Initia oan 10,000 Cash reserve 5,000 2,000 minimum draw George is 71. After the death of his wife he ives aone in his home in the West Midands, which is worth 300,000. He has no chidren. He has a sma private pension and a state pension but he s finding it harder to make ends meet. After speaking to his financia adviser, George decides to reease some of the money tied up in his home to make ife easier and to pay for a new kitchen and conservatory. He borrows 99,000 and decides to take haf of this as an initia ump sum and to keep the rest in reserve. George won t be charged any interest on the money in reserve unti he takes it. A few years after taking out his ifetime mortgage, his boier breaks down. He s quoted 1,800 for it to be repaced and he s reieved that he can take out as itte as 2,000 from his reserve to cover the cost. 8

9 Our ifetime mortgages the standard features Both of our ifetime mortgages come with a range of standard features. No negative equity guarantee As a member of the Equity Reease Counci, we give a of our ifetime mortgage customers a no negative equity guarantee. This means that you or your estate wi never have to pay back more than your property is sod for, as ong as it s sod for the best price reasonaby obtainabe. If your property is sod for more than the amount you ve borrowed against it, incuding interest when you pass away, then this amount wi form part of your persona estate and may be subject to any taxes due on that estate. Vountary partia repayment A ifetime mortgage is designed to be repaid in fu once you (and your partner for joint ifetime mortgages), have passed away or moved into ong-term care (as defined by our terms and conditions at the time). However, if you appied for your ifetime mortgage on or after the 28th Apri 2014 you can make partia repayments on a vountary basis. For instance, you may come into an unexpected windfa and find that you can afford to repay some of the money you ve borrowed. Our vountary partia repayment feature aows you to do just that, with no eary repayment charges to pay. It works ike this: Once you ve had your ifetime mortgage for a year, you have the option to make vountary partia repayments. If you want to do this, just give us a ca at the time. The maximum you can repay each year is 10% of the tota amount you have borrowed from us (which incudes the initia oan amount pus any sums you borrow at a ater date and any cash payments you draw from your cash reserve). We do not incude any interest that has buit up when deciding the maximum amount you can repay. You must wait for one year between making any vountary partia repayments and borrowing more, or drawing from your cash reserve and making vountary partia repayments, and vice versa. When you make a vountary partia repayment, we appy this to your ifetime mortgage on the day the money is received and the amount on which we charge compound interest wi reduce. We send you a statement to show how your ifetime mortgage has changed. You don t have to make any vountary partia repayments against your oan in your ifetime uness you want to. You must speak with us before making any vountary partia repayments to understand how much is avaiabe to pay. Where we receive a repayment without having had a discussion with you, this wi be returned in fu. This option is ony avaiabe to those who appied for their ifetime mortgage on or after the 28th Apri You can repay in up to four instaments each year. The minimum you can repay in each instament is

10 Louise, 59, is recenty widowed. She has a moderate income from her husband s company pension and her own pension, but won t receive her state pension unti she s 66. After a ifetime of working, she s decided to retire eary to fufi her ambition of traveing the word. Louise s home in Surrey is vaued at 400,000 and her mortgage has been paid off. After taking to her financia adviser, she decides to take an initia ump sum of 80,000 to cover the cost of her dream hoiday and to give some money to her chidren now. Five years after taking out her ifetime mortgage, Louise s aunt dies. She eaves her a arge ump sum, so Louise decides to repay some of the money she s borrowed using our vountary partia repayment feature. She s abe to pay off 8,000 each year without having to pay any eary repayment charges. Additiona borrowing With both of our ifetime mortgages you may be abe to increase your oan amount. We can t guarantee you be abe to do this as it depends on: The vaue of your home. How much you ve aready borrowed from us. If you want to borrow more you need to appy again and wi have to pay for your home to be revaued. The interest rate on the additiona amount of money you borrow wi be the rate that is current at the time that you appy. Our ending criteria and oan avaiabiity at the time. Enhanced ifetime mortgages If you have certain medica conditions that may restrict your ife expectancy, then you may be abe to get a ower rate of interest on your Lifestye Fexibe Option mortgage. If you choose our Lifestye Lump Sum Max ifetime mortgage you may be abe to borrow a higher proportion of your property s vaue (oan to vaue) or benefit from a ower rate of interest instead. Your financia adviser can assess your eigibiity for getting an enhanced ifetime mortgage, using a medica questionnaire that we provide. % Fixed interest rate Our ifetime mortgages have a fixed interest rate that appies throughout the term of your oan. The rate we set takes into consideration a number of things, incuding your persona circumstances such as your age, medica conditions and ifestye. The benefit of a fixed rate is you know % how much this wi be throughout the ife of your oan. Say is 73 and receiving treatment for cancer. Her home in Waes is worth 150,000 and after spending her ife savings she now has just her state pension to rey on. Say wants to spend more time with her chidren and grandchidren who ive in different parts of the country. She decides she d ike to take equity from her home with our Lifestye Lump Sum Max option. Due to her medica condition, she s abe to borrow a higher percentage of her property s vaue (oan to vaue) than she woud be abe to otherwise. Say decides to borrow 64,500, which she uses to spend vauabe time with her famiy. 10

11 Our ifetime mortgages optiona inheritance guarantee Inheritance guarantee A ifetime mortgage wi reduce the amount of inheritance you can eave your oved ones. However, when you appy for your ifetime mortgage you can eave them a percentage of the vaue of your home by adding an inheritance guarantee. You cannot add this feature at any other time and if you decide to take out an inheritance guarantee it may affect the interest rate you re charged. This is how it works, but for more detais pease see the Frequenty Asked Questions (FAQs) on page 22 of this guide: When you appy, te us what percentage of the vaue of your property you want to safeguard for your oved ones. The guarantee wi be for a percentage of the sae price of your home, rather than a specific sum. If you choose this option, you won t be abe to borrow as much from us because the oan amount wi be based on the proportion of your property s vaue that s not guaranteed. Pease aso bear in mind that infation wi affect the rea vaue of the money you safeguard through an inheritance guarantee. Martin, 68, and Sarah, 67 are married and have one chid, Jane. They both have sma private pensions and they aso have state pensions. They ive in West Yorkshire in a semi-detached property worth 200,000 with no mortgage on it. Martin and Sarah woud ike to withdraw some of the money tied up in their home to hep with the rising cost of iving. They aso want to eave an inheritance to Jane once they ve both passed away. They decide to guarantee 25% of their home s vaue for Jane, using our inheritance guarantee. Because of this, their ifetime mortgage is now based on a vaue of 150,000 rather than 200,000 meaning they wi be abe to borrow ess. They decide to reease 39,750 and take 20,000 of this straight away, eaving 19,750 in a cash reserve. After five years, they use some of the money in their reserve to hep Jane with the cost of nursery schoo fees for their grandson, Abert. 11

12 How much coud you borrow? This depends on three things: 1. Your age (we use the age of the youngest borrower for joint ifetime mortgages). 2. The pan you choose. 3. The vaue of your home. For our Lifestye Lump Sum Max, the amount you can borrow aso depends on whether you re appying aone or with someone ese. Getting your home vaued As the amount you can borrow depends on the vaue of your home, we arrange for a vauer to assess how much your home is worth. You have to pay a vauation fee, which depends on the estimated vaue of your property. You can find out more about this on page 14. The vauer may recommend a speciaist report for your property. If they do, we may need to see this report before we can continue with your appication. If the report shows that your home needs essentia repairs, you wi need to get this work competed as a condition of the mortgage. We tak to you about this at the time, but we may agree to reease the money to you to get the work done, if you agree to it being competed within a certain time frame. Sometimes we won t be abe to reease any money unti the work is competed so you wi have to pay for this yoursef. The vauer may need to re-inspect your home after the work has been done. We te you if this is the case and wi charge a re-inspection fee. For more information on the charges pease see page 14. Get an estimate before the vauer visits As the vauation fee depends on your estimate of your property s worth, it s a good idea to ook at websites for vaues of simiar properties in your area. Here are some usefu sites for property vaues:

13 The tabe beow shows: The minimum amount your home must be worth before we consider your appication for a minimum oan of 15,000. The maximum amount you coud borrow as a percentage of the vaue of your home. For fats and maisonettes, we base the oan on 85% of the vaue. Want to borrow more? You may be abe to borrow a higher amount on the Lifestye Lump Sum Max if you have certain medica conditions or ifestye factors affecting your heath. Ask your financia adviser for more information. Age Lifestye Lump Sum Max Lifestye Fexibe Option Minimum vaue of your home Percentage of the property vaue we end for singe appications Percentage of the property vaue we end for joint appications (based on the youngest person) Minimum vaue of your home Percentage of the property vaue we end 55 75, % 19.5% 115, % 56 75, % 20.5% 107, % 57 75, % 21.5% 100, % 58 75, % 22.5% 93, % 59 75, % 23.5% 88, % 60 75, % 24.5% % 61 75, % 25.0% 78, % 62 75, % 26.0% 75, % 63 75, % 27.0% 75, % 64 75, % 28.0% 75, % 65 75, % 29.0% 75, % 66 75, % 30.0% 75, % 67 75, % 31.5% 75, % 68 75, % 32.5% 75, % 69 75, % 33.5% 75, % 70 75, % 35.0% 75, % 71 75, % 36.0% 75, % 72 75, % 37.0% 75, % 73 75, % 38.0% 75, % 74 75, % 39.0% 75, % 75 75, % 40.0% 75, % 76 75, % 41.5% 75, % 77 75, % 43.0% 75, % 78 75, % 44.0% 75, % 79 75, % 45.0% 75, % 80 75, % 46.0% 75, % 81 75, % 47.0% 75, % 82 75, % 48.0% 75, % 83 75, % 49.0% 75, % 84 75, % 50.0% 75, % , % 51.0% 75, % You can get an idea of the maximum amount you can borrow by mutipying the vaue of your property by the percentage we ve given for your age. These figures are correct at the time of pubication but we reserve the right to ater them at any time and without notice. 13

14 Understanding the fees To set up your ifetime mortgage, you have to pay a number of fees. These range from fees we charge you, ike the arrangement and vauation fees, to fees charged by ega advisers. Definite fees An arrangement fee. A vauation fee (revauing your existing property or vauing a new property). Arrangement fee This fee covers the cost of setting up the ifetime mortgage and incudes a our ega fees and disbursements. This is currenty 600 for both the Lifestye Lump Sum Max and the Lifestye Fexibe Option. Vauation fee Possibe fees Re-inspection fee. You need to pay a fee for an independent vauation of your home. The cost wi depend on your estimated vaue of your home. The fees in the tabe beow incude an administration cost of 20, incuding VAT. Re-inspection fee We charge a re-inspection fee of 60 if we need to send a vauer out to inspect your home again. This may be necessary if you ve had to carry out essentia repairs. The 60 incudes a 15 administration fee. Lega fees You must appoint a ega adviser to act on your behaf. Soicitors who are members of The Nationa Soicitors Network wi charge 350 pus VAT for a standard case, athough you may have to pay fees for any extra services. Soicitors outside of this network may charge differenty. Fees for making changes to your pan There may be a time where you decide you need to borrow more money, move home or even add or remove someone from your ifetime mortgage. If this happens there wi be fees invoved which we discuss with you at the time. Estimated vaue of your home Fee 75,000 to 150, ,001 to 300, ,001 to 500, ,001 to 750, ,001 to 1,000, ,000,001 to 1,100, ,100,001 to 1,200,000 1,120 1,200,001 to 1,500,000 1,270 1,500,001 to 2,000,000 1,420 Over 2,000,000 Pease ca us about this 14

15 Other ega fees Depending on your circumstances, there coud be occasions when you may have to pay for extra ega services: Where your home is unregistered Fees If there are sti deeds for your property, it probaby hasn t been registered eectronicay with the Land Registry. 70 pus VAT charged where using a soicitor from The Nationa Soicitors Network. This means your soicitor wi have to check paper trais for ownership and any previous mortgages, rights and interests in the property. Where your home is easehod Your soicitor must read your ease (usuay about 20 pages or so) and make enquiries with your andord. 35 pus VAT charged where using a soicitor from The Nationa Soicitors Network. Where you re moving home If you re buying your home, your soicitor wi need to make additiona checks, searches and enquiries to make sure the property and the tite are suitabe for the ifetime mortgage. 85 pus VAT charged where using a soicitor from The Nationa Soicitors Network. Where a transfer of equity is needed The property must be owned by the person or persons who are taking out the ifetime mortgage. For exampe, if there are two of you, and the property is ony owned by one of you, or if you ve inherited a property, the ownership wi need to be transferred. Your soicitor wi have to make additiona checks and draft extra documents to do this. 75 pus VAT where using a soicitor from The Nationa Soicitors Network. Home visit You can ask your soicitor to visit you at home, athough not a soicitors wi offer this service. 50 pus VAT where using a soicitor from The Nationa Soicitors Network. Where your home has compex tite probems This is to cover circumstances that neither your soicitor nor ours coud have anticipated when putting the fee scae together. This rarey happens, but if it does we aways te you before making the charge and expain what the charge is for. The cost varies we te you if this appies to you. 15

16 What happens if your circumstances change? Eary repayment charges A ifetime mortgage is designed to be a ong-term commitment. Therefore you may face eary repayment charges if you repay the oan in fu before you (and your partner for joint ifetime mortgages), pass away or move into ong-term care. If an eary repayment charge (ERC) does appy, we guarantee that it wi never be more than 25% of your initia oan amount. If you ve borrowed more money from us, you may aso have to pay an ERC on any additiona money you ve borrowed. This coud be up to 25% of each additiona amount you ve borrowed. If you take the Lifestye Fexibe Option and want to repay it, you may aso have to repay an ERC of up to 25% on each amount you ve borrowed from your cash reserve. If you consider fuy repaying your ifetime mortgage, your adviser wi be abe to inform you of the costs that wi appy at that time. Circumstances in which eary repayment charges don t appy In certain circumstances there wi be no ERC to pay. These are: You have a joint ifetime mortgage and you repay within three years of the date that one of you has passed away or the date that you notify us that one of you needs ong-term care (subject to our terms and conditions), whichever is earier. This ony appies to those who appied for their ifetime mortgage on or after the 28th Apri Where a the borrowers have died or have moved into ong-term care. You re moving property and transferring your ifetime mortgage to a new property. If you move home to a property that s worth ess than your current home you may be required to repay part of your oan and the interest you owe. Where you are making vountary partia repayments. How we cacuate eary repayment charges We cacuate the ERC based on movements in the yied on government gits. If the yied on government gits has faen since you took out your ifetime mortgage (or borrowed more money from us), then an eary repayment charge may be payabe. We suggest you tak to your financia adviser, who be abe to te you more about this. You aso find more information in the terms and conditions. See page 9 of this guide. You want to se part of your property and we ve given you consent to do this. You want someone to move into the property with you as a joint borrower and for your ifetime mortgage to be repayabe when the ast person dies or moves into ong-term care. If the other joint borrower is younger than you, then you may be required to repay part of your ifetime mortgage. Git yieds have stayed the same or are higher. Your financia adviser wi be abe to expain this to you and this is aso expained in the terms and conditions. 16

17 Making changes to your ifetime mortgage As a ifetime mortgage is a ong-term commitment, you may fnd that your circumstances change over the time you have it. With this in mind, we try to be as fexibe as possibe in making changes to your pan. Can I move? Yes, provided your new property meets our ending criteria when you appy, and we agree that you can move home and take your ifetime mortgage with you. As soon as you decide you want to move, pease ca us on We expain the process and et you know if our ending criteria have changed since you took out your ifetime mortgage. We can aso send you our moving home guide. Moving from a house or bungaow to a fat or maisonette This wi have impications for your ifetime mortgage. We currenty ony consider 85% of the vaue of fats and maisonettes for a ifetime mortgage. Because of this, we may require you to repay part of your oan if you move from a house or bungaow to a fat or maisonette. Pease ca us on if you re considering doing this as our ending criteria may change in the future. Wi I have to pay any fees if I move home? Yes, we arrange to vaue the new property and we may aso need to revaue your existing property. You have to pay the fees for this and an appication fee. You must aso appoint a ega adviser to carry out a the ega work for buying your new property and transferring your ifetime mortgage. We wi instruct your ega adviser to act for us as we and you have to pay their fees. You won t have to pay any eary repayment charges if you transfer your oan to your new home. Moving to a property of ower vaue We may require you to repay part of your origina oan and interest if you move to a property of ower vaue. This depends on the tota amount of your oan, pus interest at that time, and the vaue of your new home. Moving to a property of higher vaue This won t have any effect on your oan. You may be abe to borrow more. If you have a cash reserve, we may need to reduce this amount. 17

18 Adding someone new to your pan If someone ese is moving into your property to become a joint owner after you ve taken out your ifetime mortgage, then you need to inform us about this as soon as possibe. Whether you can add the other person to your ifetime mortgage depends on how od they were when you took it out. Under 55 when you took out your ifetime mortgage Over 55 when you took out your ifetime mortgage You can t add them to your ifetime mortgage as you need to be aged 55 or over when the pan starts. You have to repay your ifetime mortgage if you want the other person to become a joint owner of your home. You can transfer your home to joint names and we add them to the ifetime mortgage. You wi have to pay ega fees if you do this. You may be required to repay part of your oan and interest, especiay if the person you re adding is younger than you. We strongy advise that you tak to your financia adviser if you re considering this option as you may have to pay a substantia eary repayment charge. It wi depend on: how much you aready owe for the ifetime mortgage It s aso worth speaking to your soicitor as you may be abe to make provision for your partner without naming them as a joint owner of your home. the current oan to vaue amount for the younger person the vaue of your property (we appoint a vauer to assess your property. You have to pay vauation fees). Removing someone from your pan It may be the case that you or your joint poicy hoder eaves the property. If this happens you must te us as soon as possibe. You won t have to repay the oan, but we wi transfer your home and ifetime mortgage into the name of the remaining borrower. We send you an appication form and you need to appoint a soicitor to carry out the ega work. We wi instruct your ega adviser to act for us as we and you have to pay their fees. If you re the eder borrower and the ifetime mortgage is transferred to your name, you may be abe to borrow more. Pease tak to us about this if you re considering it. 18

19 Questions and answers Wi I sti own my home? Yes, youõre sti the ega owner of your home and can stay in it unti you (and your partner for joint ifetime mortgages) pass away or need to eave your home to go into ong-term care. WeÕ never force you to eave your home because you need care. In fact, you can arrange for care in your home. If you do this, you wonõt have to repay the oan uness you pass away or move into ong-term care. What are my responsibiities? You must maintain the property and keep it in good repair. The property must aso be insured and you must pay a propertyreated bis such as counci tax, utiity bis and service charges. The property aso needs to remain your main residence. What happens if I eave my home to move into ong-term care? If you eave your property permanenty to move into ong-term care we may send you an assessment form to compete. This assessment form wi determine whether you wi need to pay an eary repayment charge for eaving your home. You wonõt have to pay an eary repayment charge if we understand that you have dementia or are unabe to perform two or more activities of daiy iving, which are defined in our terms and conditions, and have permanenty eft your home to receive care. If this criteria is not met then you may have to pay an eary repayment charge if you have permanenty eft your home. We wi never ask you to eave your home, you can continue to ive in your home unti you pass away or move into ong-term care. Can I make changes to my home? YouÕre free to make improvements to your home, you can even use the money from your ifetime mortgage. However, you must et us know if youõre panning to make any structura changes, e.g. adding an extension or conservatory to your home. YouÕ need to send us copies of any panning permission and buiding reguations approva. Wi this affect my tax position? You donõt have to pay tax on the money we oan you. However, you need to consider the tax impications of what you do with this money e.g. invest, put in a bank account. You may wish to seek financia advice if you are unsure. Wi this affect my benefits? The oan coud affect your entitement to wefare benefits, such as counci tax benefit, pension credit and certain heath benefits. We suggest visiting for more information. When is my oan repaid in fu? Your oan isnõt repaid in fu unti you pass away or go into ong-term care. When that happens, your home wi be sod and weõ take the vaue of the oan, pus the interest thatõs been accrued on it, from the sae price. Our no negative equity guarantee means weõ never ask you or your estate to pay back more than what you receive from the sae of your home, provided its sod for the best price reasonaby obtainabe. Can I repay my oan eary in fu? Yes, but you shoud remember that your ifetime mortgage is a ong-term commitment, designed to ast unti you pass away or become eigibe to move into ong-term care. Repaying your oan in fu before then coud mean you have to pay eary repayment charges. See page 16 for detais of what happens shoud your circumstances change. If youõre thinking about repaying your oan eary because youõre moving home, you might want to consider transferring your ifetime mortgage to your new home. Can I repay part of my oan? You can make vountary partia repayments if you appied for your ifetime mortgage on or after the 28th Apri 2014 and have had your oan for a year. For detais of how our vountary partia repayment feature works see page 9 of this guide. 19

20 Questions and answers Can I add a new borrower? You may be abe to add a new borrower. You need to contact us and we expain what happens and any fees that may be charged. However, if you go ahead we may require you to pay back part of your oan and part of the interest. See page 18 of this guide for more detais. What happens if I move to a new ower vaued property? Provided your new property meets our ending criteria at the time and we agree, then you can move home and take your ifetime mortgage with you. We may require you to pay back part of your oan and the interest you owe if you move to a new property that s worth ess than your current home or you re moving to a fat or maisonette. How do I know how much I owe? We send you an annua statement on the anniversary of you taking out your ifetime mortgage. It te you how much you ve borrowed, whether you ve made any repayments and the amount of interest accrued. Whenever you make a vountary partia repayment we send you a separate statement to show how this has affected your oan amount. Can I borrow more money? You may be abe to borrow more money, but it depends on: The vaue of your home. How much you ve aready borrowed from us. Our ending criteria and oan avaiabiity at that time. You may be abe to borrow more if your home has increased in vaue or if you didn t borrow the fu amount when you took out your origina oan. It s unikey you d be abe to borrow more if your home has faen in vaue or if you ve aready borrowed the maximum avaiabe. If you added an inheritance guarantee to your ifetime mortgage, you may be abe to reduce or remove it to borrow additiona money. We ony accept an appication for additiona borrowing if you ve received fu financia advice. We arrange for a vauation of your home, which you have to pay for. If you re borrowing more at the same time as moving home or changing ownership and have aready paid a vauation fee, we won t ask you to pay another fee. You need to pay an arrangement fee, which we take from your oan before we send you the money. We ve outined the fees on pages 14 and 15 of this booket, but you can find fu detais of a the fees in our tariff of charges document. Your financia adviser wi be abe to give you a copy of this. Wi I pay interest on my oan? Yes, but you don t have to make repayments ike you woud with an ordinary mortgage. Instead, we add interest to the amount you owe. The interest must be repaid aong with the oan when you pass away, go into ong-term care or choose to repay the oan eary. We charge interest on both the amount you borrow and the interest aready added. This method of charging interest is known as compound interest. This means the amount you owe grows quicky. Compound interest is aso appied to any additiona money you borrow and to any cash reserve you draw, so the more you borrow, the faster the tota amount you owe wi increase. Because of this, it makes sense to ony borrow as much money as you need. You may be abe to borrow more at a ater date if you need to. 20

21 Questions and answers What are the interest rates? To hep you compare with other oans, here are the current average rates and annua percentage rates (APR) for our Lifestye Lump Sum Max and Lifestye Fexibe Option ifetime mortgages. The actua rate avaiabe wi depend upon your circumstances. Pease ask us for a personaised iustration. Annua interest rate: The overa cost for comparison is: Lifestye Lump Sum Max Lifestye Lump Sum Max (with inheritance guarantee) Lifestye Fexibe Option Lifestye Fexibe Option (with inheritance guarantee) 7.39% 7.30% 6.19% 6.36% 7.5% APR 7.5% APR 6.3% APR 6.5% APR These rates are correct as at 09/04/2015. An APR is designed to aow you to compare one type of oan to another. It is the interest rate for a whoe year rather than just a monthy rate. Once we receive your appication, we guarantee the interest rate on that date for the next 14 weeks. If your oan hasn t competed within this time, we contact your adviser to see if you want to continue with your appication. If you compete after the initia 14 weeks we wi appy the rate that is correct on the day you compete, which coud be higher or ower than your origina rate. What interest rate wi I pay when I take money from my cash reserve? We offer you the interest rate appying on the day you ask for each additiona cash reease. We guarantee this for 14 days. If your additiona oan doesn t compete within this time, we use the interest rate on the day we reease your money. How wi a ifetime mortgage affect the inheritance I eave behind? Your ifetime mortgage wi reduce the amount of inheritance you eave for your oved ones. As you don t repay your oan unti you pass away or go into ong-term care, the interest on your oan buids up over the years. This reduces the amount of inheritance you can eave, possiby to nothing, depending on your circumstances. The oan and interest are ony repaid when you pass away or need to go into ong-term care, usuay by seing your property. If there s any money eft over, it wi go to you or your estate. Can I do anything to guarantee eaving an inheritance? You can add an inheritance guarantee to your ifetime mortgage when you take it out. This makes sure that you or your beneficiaries receive a percentage of the sae price of your house when it s sod, whatever it s worth. See page 11 of this guide for more detais. 21

22 Questions and answers Does an inheritance guarantee affect how much I can borrow? Yes, it wi reduce the amount you can borrow. This is because we cacuate how much you can borrow using the vaue of your property not covered by the guarantee. For exampe, if you want an inheritance guarantee of 20% and your home is currenty worth 150,000, we base our cacuations on a vaue of 120,000. This means you need to make sure that you can sti borrow at east the minimum oan amount after taking into account the amount covered by the inheritance guarantee. An inheritance guarantee may aso affect the interest rate we offer you. Pease see the interest rate tabe on page 21. Can I change my mind about an inheritance guarantee? What if I donõt choose to guarantee an inheritance? Without an inheritance guarantee, there may not be any vaue eft in your home to eave to your famiy and friends once your oan and the interest has been repaid. Wi my beneficiaries have to pay the difference if my home ses for ess than the amount owed? No, our ifetime mortgages have a no negative equity guarantee. This means we never ask you or your estate to pay back more than the amount received from the sae of your home, provided it is sod for the best price reasonaby obtainabe. You can ony add an inheritance guarantee to your ifetime mortgage when you first take it out. You can t add it at a ater date. Athough you can t increase the percentage you ve chosen, you can reduce or remove the guarantee in certain circumstances. See our terms and conditions for more detais. Wi you aways pay the percentage safeguarded by the inheritance guarantee to me or my estate? Yes, except where: You repay your oan eary, or You don t adhere to the terms and conditions of your ifetime mortgage. 22

23 Acceptabe properties Types of homes we may accept Location Homes must be ocated within Engand, Waes, Scotand or Northern Ireand. We don t currenty accept properties in the Ise of Man or the Channe Isands. Tenure Houses in Engand, Waes and Northern Ireand can be freehod or easehod. Fats and maisonettes in Engand, Waes and Northern Ireand must be easehod. Properties in Scotand can be Freehod, feuhod or ex-feuhod. For easehod properties the sum of the years remaining on the ease pus the age of the youngest borrower must equa at east 160. Occupancy The property must be your main residence. If you are making a singe appication, you must be the soe owner/occupier. If you are making a joint appication, you must jointy own and occupy the property. Vauation It must be worth at east 75,000. Pease ask your financia adviser to contact us for further information on properties we do and don t accept. We may not be abe to accept your property if: Property Type It s a fat or maisonette that is freehod or in a oca authority (NIHE in Northern Ireand) or housing authority bock of more than four storeys. It s a retirement property. It s a studio or basement fat. It s a mobie home or houseboat. Property Use It s a farm or smahoding being used for agricuture. It s a hote, guest house or B&B. It is property used for any form of business or commercia activity by anyone. Occupancy It is tenanted. It is bound by panning restrictions over who can ive in the property, for exampe, tied to a particuar job, such as an agricutura job. Vauation and condition It s in a food risk area. It is beow the vaue needed for us to end you the minimum oan amount. It is deemed unsuitabe security for the oan by the vauer. The vauer recommends speciaist reports and/or essentia repairs that you don t want to carry out. Essentia repairs identified by the vauer or speciaist are not competed. We wi not transfer the ifetime mortgage if they are not. You wi be responsibe for any costs, incuding the vauer s re-inspection fees. Buiding materias Buit with any mundic concrete, high auminium cement (HAC), or pre-fabricated concrete (PFC) or pre-reinforced concrete (PRC). Buit on or very cose to a contaminated site. A timber framed property and cavity wa insuation was instaed after it was originay buit. Meta/Stee framed or stee cad property buit before These types of properties generay tend to have been buit by a oca authority (NIHE in Northern Ireand). Meta/Stee framed property with cavity wa insuation instaed after competion of the origina construction. A singe skin, eaf construction, or arge pane system buiding. A fat-roofed property. Contains red ash. 23

24 Getting advice and hep To ensure equity reease is right for you, we can ony provide one of our ifetime mortgages if you take both fnancia and ega advice. Tak to an authorised financia adviser If you re considering a ifetime mortgage, you must seek financia advice. Equity reease isn t suitabe for everyone and a financia adviser can hep you decide whether it s the right option for you. If you have a financia adviser then contact them and they be abe to tak you through your options. If you don t have a financia adviser you can find one near you by visiting If equity reease isn t right for you for whatever reason, your financia adviser wi te you so. They be abe to expain the ifetime mortgage to you and make sure that you understand everything before you make your fina decision. Make sure you take ega advice You woudn t dream of buying a new home without appointing a soicitor. It s no different if you re thinking about taking out a ifetime mortgage. It s important that you appoint a soicitor to act for you. We suggest that you appoint a soicitor who is a member of The Nationa Soicitors Network. That way you wi know the fees from the start and you can be sure that your soicitor wi meet their standards of service. Making a compaint We re confident you never need to compain, but if you do, pease write to us at: Aviva PO Box 520 Surrey Street Norwich NR1 3WG or ca us on: If you re not happy with our response, you can get in touch with the Financia Ombudsman: Investment Division Financia Ombudsman Service Exchange Tower London E14 9SR Te: (free from andines) or (charged at the same rate as 01 and 02 numbers from a mobie phone). This won t affect your ega rights. Your financia adviser wi be abe to give you the names of at east two soicitors in your area who are members of the Nationa Soicitors Network. We ve outined the ega fees on page 14 and 15 of this guide. You can find fu detais of a the charges in our tariff of charges eafet. Your financia adviser wi be abe to give you a copy of this. 24

25 Putting your mind at rest One of the most important aspects of taking out a ifetime mortgage is making sure that you re competey comfortabe with the decision you ve made. Why Aviva? There are a number of reasons you can fee confident about taking out a ifetime mortgage with Aviva. Award winning proposition. We ve over a decade of experience heping peope unock cash from their home. We re a eading ife insurer in the UK, so you know we re a name you can trust. We re reguated by the Financia Conduct Authority, an independent watchdog that oversees the financia services industry in the UK and protects the rights of consumers. We re members of the Equity Reease Counci, which protects peope reeasing equity from their home. We ony se you a ifetime mortgage after you ve been propery advised by a professiona financia adviser. Equity Reease Counci We re ong-standing members of the Equity Reease Counci, formery known as SHIP, a trade body set up in 1991 to hep protect peope taking out equity reease. We aways recommend that if you re considering equity reease, you shoud choose a provider that is a member of the Equity Reease Counci. If you d ike more information about the Equity Reease Counci ca or visit: Statement of Principes 1. Aows customers to remain in their property for ife provided the property remains their main residence. 2. Provides customers with fair, simpe and compete presentations of their pans. This means that the benefits and imitations of the product together with any obigations on the part of the customer are ceary set out in their iterature. It shoud incude a costs that the customer has to bear in setting up the pan as we as the tax impications, their position on moving house and the effects of changes in house vaues on their oan. 3. Aows customers the right to move their pan to another suitabe property without any financia penaty. 4. Gives customers the right to an independent soicitor of their own choice to conduct their ega work. The firm must provide the soicitor with fu detais of the benefits their cient wi receive prior to the competion of the pan. The soicitor ony signs a certificate once he or she is satisfied that their cient fuy understands the risks and benefits of the pan. 5. Provides an Equity Reease Counci certificate, signed by the soicitor, to ensure cients are aware of the terms and impications of the pan incuding the impact of equity reease on their estate. 6. Gives customers a no negative equity guarantee on a equity reease pans. This means customers wi never owe more than the vaue of their home and no debt wi ever be eft to the estate. This Statement of Principes offers peace of mind to the consumer, who can use Equity Reease Counci approved equity reease products in confidence. They know they be abe to remain in their own home for the rest of their ives or unti they quaify to go into ong-term care. Consumers can be sure that they wi never eave a debt to their famiy as a Equity Reease Counci members who provide equity reease products give consumers a no negative equity guarantee, meaning that no matter what happens to the housing market, they wi never owe more than the vaue of their home. The Equity Reease Counci aso insists its members ensure that any customer buying an equity reease pan has received advice from a fuy quaified adviser who has gone through a fu advice process. 25