Aviva’s equity release customers will have to pay higher charges if they want to make changes to their mortgages
Insurance giant Aviva has written to its equity release customers informing them that they will have to pay higher charges if they want to make changes to their mortgages in the future.
The new charges – which in some cases are more than double previous fees – will apply from mid-August. In a letter sent to all of its equity release customers, Aviva said the higher fees ‘reflect our reasonable costs for administering your lifetime mortgage’. The interest rate that planholders pay on their borrowings will remain unchanged.
Lifetime mortgages are taken out by people over the age of 55 who want to release a slice of equity from the value of their home to bolster their finances. Unlike a traditional home loan, borrowers do not pay monthly interest.
Price hike: The fee increases apply to a series of changes that Aviva’s customers are permitted to make to their equity release plans
Instead, interest payments, which are fixed from the start, are automatically rolled up into the loan which means the outstanding debt ratchets up over time. Typically, the debt is cleared from the proceeds of selling the home when the owners die or go into long-term care.
The fee increases apply to a series of changes that Aviva’s customers are permitted to make to their equity release plans. For example, someone wanting to borrow additional money will from August have to pay an application fee of £175, compared to £75 previously. If Aviva needs to view the property before approving this extra borrowing, it will also charge a ‘reinspection’ fee of £60.
If a borrower is moving home and wants to transfer their Aviva loan to the new property, the insurer will charge £395 instead of £165. It will apply the same charge if some one is added to – or removed from – the loan.
Aviva said: ‘Calculations were undertaken based on current processing times and expenses. The outcome of our review on this occasion was that some customer fees needed to increase.’
Aviva is one of a number of equity release providers, including Canada Life, Just Group, Legal & General and Nationwide Building Society.
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