Equity release provider Aviva is ditching home reversion plans in favour of lifetime mortgages.
The finance giant claims most customers opt for lifetime mortgages and intends to stop offering reversion plans by February 10.
New applications from homeowners will be considered until that date.
Aviva offers home reversion plans funded by Grainger plc, owner of home reversion specialist Bridgewater Equity Release.
Aviva will continue to offer lifetime mortgages, which are funded and underwritten in-house. The firm has introduced two loan packages over recent months and includes an inheritance guarantee.
Clive Bolton, retirement director at Aviva, said: “We remain totally committed to the equity release market – it is a cornerstone for retirement planning, as housing equity is often the largest asset that people have.
“As retirement incomes get tighter and people are living longer, we believe it will become an increasingly important option for retirees.”
A lifetime mortgage is a long term loan secured against a home that allows a borrower to release money straight away or up to an agreed limit over a period of time.
A home reversion plan involved sell all or part of a property to a lender with an agreement that the householder can stay in the property.
Meanwhile, SHIP – short for Safe Home Income Plans, the equity release provider trade body – is urging the government to streamline administration of equity release by nominating either the Treasury or Department of Work and Pensions as responsible for the sector.
Currently, responsibility is spread across several departments.
“What we have to do now is up the pressure to really make it clear that one department does need to take ownership and that’s one of the strongest things we’ll be lobbying for this year,” said a spokesman.
“The reason why we would be looking towards the Treasury is because any release of monies into the economy is going to have a benefit on the economy as a whole. So it would seem the Treasury is probably the most ideal department, but without knowing what the government feels it’s difficult to determine.”
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