Home Reversion Plans
With a home reversion scheme you sell all or part of your home (between 25% -100%) to a reversion company. In return they give you a cash lump sum plus a guarantee that you can continue to live in your home for the rest of your life. However they will not give you the full market value for the percentage they buy as you will be effectively living rent free (in the portion that they buy) for the rest of your life. Older people will receive a higher amount than younger people and men more than women.
On the sale of the property the reversion company takes the value of their percentage including any growth and the balance goes to you or your estate.
For example; Fred, aged 72, has a house worth £140,000. He sells 50% of it to a reversion company. The company pays him £30,000, which is 43% of the market value of their half share. 15 years later, Fred dies and his house, which is now worth £200,000, is sold. As the reversion company own 50% of the property, they take £100,000 and the remaining £100,000 goes to his estate.
Please note that this is for illustration purposes only and there is no guarantee that house prices will increase in the future. To discover if Equity Release and Home Reversion Plans are suitable for you, please ask for our FREE, no obligation, equity release information pack.
This is a Home Reversion scheme. To understand the features and risks, ask for a personalised illustration.
Advantages of a Home Reversion Plan
- You do not make any monthly repayments.
- If you retain a percentage ownership of the property, you can guarantee an inheritance will still be available to your heirs.
- Any increase in the value of your share of the property will be for the benefit of you or your estate.
- More money is potentially available to older people with Home Reversion than with a Lifetime Mortgage.
- The lump sum you receive is tax-free and can be spent as you wish.
- It may be possible to receive a further advance in the future (subject to the plan providers agreement).
- If your estate is potentially liable to Inheritance Tax, selling a percentage of your property could possibly reduce its impact.
Alternatively please read about Lifetime Mortgages.
Disadvantages of a Home Reversion Plan
- A Home Reversion Plan can not normally be cancelled as you have sold all or part of your home.
- The inheritance available to your heirs will be reduced by the percentage value that you have sold.
- You will not receive the full value of the part of your property that you sell.
- As you have sold all or part of your property, you or your estate will not benefit from increases in the value of the part owned by the Reversion provider.
- The amount of money available to younger people is less than that from a Lifetime Mortgage.
- It cannot be guaranteed that further advances will be available in the future.
- Your personal circumstances may change in the future and releasing equity may impact on your entitlement to state benefits and may affect the amount of tax you pay.
Discover more about Equity Release with our FREE, no obligation, equity release information pack or call us free on: 0800 030 55 95