Are you looking ahead to retirement, but unsure about affording your interest-only mortgage payments?
An Aviva Property Plan is a lifetime mortgage and refers to Aviva's Lifestyle Lump Sum Max and Lifestyle Flexible Option products. Below we've put together a typical scenario to show how an Aviva Property Plan could help you.
Rebecca and Tom are both 58, and took out an interest-only mortgage on their home in Birmingham. When they took it out, Tom worked for a car manufacturer and Rebecca worked in retail, but Rebecca had to give up work due to a long-term medical condition, and Tom was then made redundant – so switched careers to become a carpenter. It covers the bills and basics, but leaves little extra at the end of the month.
While they don’t have children to pay for, their interest-only mortgage still poses them a problem. Tom’s cashed in an old pension to boost their money until they both receive the State Pension at the age of 66, but they’re still falling £20,000 short of paying off their mortgage.
Given Rebecca’s condition, moving home isn’t an option – so they need to find another way to pay.
By choosing an Aviva Property Plan, Rebecca and Tom could borrow up to £31,500 off of their £180,000 home.
They could take £25,000 – using £20,000 to repay their existing mortgage in full, and £5,000 on home improvements and a much-needed long holiday. Plus, they could put £6,500 in a reserve to cover any future shortfalls that come around before they reach their State Pension.
Thanks to the flexibility of the plan, they wouldn't be tied to monthly repayments and Tom, who wants to work as long as possible, would have the option of making partial repayments of up to 10% of their loan amount each year after the first, with no penalty.
Could you afford your mortgage with an Aviva Property Plan?
Our 2016 research* showed that 23% of mortgaged over-45s are worried about paying off their loans.
And at least 2.12m people expect they’ll need to borrow money in retirement, with 1.19m needing to borrow to stay in their own home.
The lump sum you could access with an Aviva Property Plan might help your afford more in retirement.
This is a fictitious example for illustrative purposes only. An Aviva Property Plan is a lifetime mortgage which can’t be taken out without financial advice so we’ll put you through to a carefully selected, specialist adviser who isn’t employed by us but can only advise on our lifetime mortgages. If you require general financial planning and investment advice please speak to your own financial adviser. If don't have an adviser, but want to speak to one, you can find one near you at www.unbiased.co.uk. Taking out a lifetime mortgage will reduce the amount of inheritance you are able to leave. Your tax position and eligibility for welfare benefits may also be affected.
Call us on 0800 141 3422 to check if you’re eligible for a lifetime mortgage and to be put through to a specialist financial adviser who is qualified in providing advice on lifetime mortgages.
*All data drawn from the Aviva Real Retirement Report 2016.