Calculators are not created equal in the equity release market. Instead, many companies have their own calculators on their website, while there are independent websites for independent brokerage firms that offer independent calculators and other tools. The Aviva equity release eligibility calculator is dependent on Aviva’s website. It is not going to provide you with results on any product but the Aviva Lump Sum Max plan.
The Lump Sum Max Plan
This lifetime mortgage product is not sold through Aviva sales representatives. Instead, there is a brokerage firm that is dependent or symbiotic with Aviva. The agreement stipulates the firm cannot mention other products in the market. They are only allowed to provide more information regarding the Aviva Lump Sum Max plan. Not only is the plan the only thing they can mention, but it is not a competitive product, which Aviva does have just not on their website or through the brokerage firm they offer the lump sum deal with.
If you went to Equity Release Supermarket you could find other Aviva products that are more competitive. You would also be able to compare them with Just Retirement, Pure Retirement, More2Life and other equity release companies. By going to independent sites you would also be able to locate independent advice from qualified brokers able to speak about the different equity release products on the market.
There is definitely a benefit to not using the Aviva equity release eligibility calculator. As a person looking for financial products you should be armed with all the information about available products and not just one option. In this way you make a sound decision on what is best for you and later on your beneficiaries. You should be aware that your beneficiaries could suffer if the product is not competitive enough.
What Equity Release Calculators Tell You
Equity release calculators are designed to give you a few pieces of information, but mostly they tell you if the loan amount you are offered from the lifetime mortgage company is going to be the amount you want. Basically the calculator is designed to tell you the maximum amount of tax free cash you can get in a lump sum or other equity release product.
For example at age 65 Pure Retirement, Just Retirement, and Aviva all offer a maximum loan to value percentage of 30%, but if you go up to age 75 Aviva offers 41% while Pure Retirement offers 42%.
To make this clearer if you own a home that is £100k in value, meaning this is the equity you have in it and you are 65 you could receive £30,000 as the maximum cash amount from the three companies. If you are 75 with the same housing value you would get £41,000 from Aviva and £42,000 from Pure Retirement. Pure Retirement offers a deal in which you do not pay for the appraisal and if the amount is more than £45,000 you do not have to pay the application fee.
As you can see there are variations on what you can get from a company. One of the most important things to understand is how the loan to value percentage is reached. Obviously you know the factors: age and home value. What you may not understand is the reasoning behind the values stated here.
An equity release company is in the business of making money. They are investing in you. This is a future investment return for them because you have to sell the home or die for the loan to be paid in full plus any interest. This is what lifetime mortgage is all about.
The older you are the less time you have left on earth. This is how the lender looks at it. Someone 65 could life to 100, which is 35 years of an outstanding loan accruing interest. The house has to have enough value in it to cover the compounding interest without turning the situation into one of negative equity. Homes are also meant to appreciate, but depreciation can also happen. If the market plummets the company could be left without profit. Therefore, they make certain you have enough value in a home to cover the amount you want plus an age that ensures you will not live long enough to go beyond the worth of the home.
When you put all that together, you want an independent calculator and not the Aviva equity release eligibility calculator that only gives you data on one product.
