Aviva lifetime mortgage help....

[flame]

Hi

Any financial advisors or members with similar experience comments would be welcome.

With my Father's recent passing a financial issue has come to light.

Aviva lifetime mortgage product taken out in 2001 for £40k. Balance currently stands at £176k and increasing at 8% compound !

Aviva have requested payment of £220k if we wish to end the agreement.

We were hoping they might be open to the suggestion of switching to a cheaper product ( 2.5% ) , however Aviva want to levy a huge £45k ' fee '.

This would leave only options of death of my step mother ( not on anyone's wish list ) or sale of the house ( not ideal , however.... ).

Is it not possible to switch to an alternative product or provider without incurring such a huge fee....it's frankly obscene/bordering criminal.

Help !

Best Neil

[westberks]

Hi

Any financial advisors or members with similar experience comments would be welcome.

With my Father's recent passing a financial issue has come to light.

Aviva lifetime mortgage product taken out in 2001 for £40k. Balance currently stands at £176k and increasing at 8% compound !

Aviva have requested payment of £220k if we wish to end the agreement.

We were hoping they might be open to the suggestion of switching to a cheaper product ( 2.5% ) , however Aviva want to levy a huge £45k ' fee '.

This would leave only options of death of my step mother ( not on anyone's wish list ) or sale of the house ( not ideal , however.... ).

Is it not possible to switch to an alternative product or provider without incurring such a huge fee....it's frankly obscene/bordering criminal.

Help !

Best Neil

Hi Neil

RIP to your father first and foremost; not a nice thing to have to deal with after the passing of a loved one.

unfortunately this is one of the earlier contracts that don't have any 'escape clauses' and the only way the redemption penalty can be avoided is a massive increase in gilt rates (not happening).

Nowadays the equivalent would have a penalty free option at death of one of the mortgage holders, or a downsize option; or simply be at 3% which is more palatable. The earlier loans were pretty strict and one of the reasons equity release has such a bad press.

Saw a client recently who had a similar situation and they were pretty much fooked as the options were pay the penalty or carry on at 8%; as they were elderly they opted to carry on as the odds were if they paid the penalty they might not outlive the break even point.

might be worth speaking to Aviva or going on social media to try and guilt them but according to the letter of the deal I think you are stuck with them.

sorry

[flame]

Hi

Thank you for your kind thoughts & comments.

Feck....

Best Neil

[Wyvern971]

Horrible situation to be in.

Sorry for your loss, and I think that's the most important part.

Although I can't offer any advice, what they are doing sounds absolutely horrible

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[redmonaco]

Hi

Any financial advisors or members with similar experience comments would be welcome.

With my Father's recent passing a financial issue has come to light.

Aviva lifetime mortgage product taken out in 2001 for £40k. Balance currently stands at £176k and increasing at 8% compound !

Aviva have requested payment of £220k if we wish to end the agreement.

We were hoping they might be open to the suggestion of switching to a cheaper product ( 2.5% ) , however Aviva want to levy a huge £45k ' fee '.

This would leave only options of death of my step mother ( not on anyone's wish list ) or sale of the house ( not ideal , however.... ).

Is it not possible to switch to an alternative product or provider without incurring such a huge fee....it's frankly obscene/bordering criminal.

Help !

Best Neil

I don't know what the property is worth but its value has probably increased by more than the interest that has been charged so the plan did what it was supposed to do for your Father?

[flame]

Hi

Property is currently worth circa £650k.

I doubt very much it's appreciating at £20k+ per year for the foreseeable future.

Best Neil

[reecie]

Are you able to switch to the cheaper product by lumping the fee into the outstanding loan? It may cost in over a fairly short period. Particularly if the overall terms are better. Scary how it compounds up but I imagine the house price has also shot up a lot over that time period.

[dandanthewatchman]

Condolences.

Is there a chance it was mid-sold ie correct advice not given. It was taken out 20 years ago - the rate then actually seems quite reasonable, but compounding over 20 years has a massive snowballing effect. At that time there is a chance your father wasn’t given the full picture


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[KNog]

Hi

Any financial advisors or members with similar experience comments would be welcome.

With my Father's recent passing a financial issue has come to light.

Aviva lifetime mortgage product taken out in 2001 for £40k. Balance currently stands at £176k and increasing at 8% compound !

Aviva have requested payment of £220k if we wish to end the agreement.

We were hoping they might be open to the suggestion of switching to a cheaper product ( 2.5% ) , however Aviva want to levy a huge £45k ' fee '.

This would leave only options of death of my step mother ( not on anyone's wish list ) or sale of the house ( not ideal , however.... ).

Is it not possible to switch to an alternative product or provider without incurring such a huge fee....it's frankly obscene/bordering criminal.

Help !

Best Neil

The 220k repayment figure is what the balance would be in about 3 years.

45k is roughly the difference in the 2.5% vs 8% over 4 years.

Could you get a new much lower mortgage to repay the 220k?