Frequently Asked Questions
Here we aim to answer all the most frequently asked questions surrounding Home Reversions with short and easy to understand answers.
+ Will I lose ownership of my home by taking Home Reversion’?
You will lose ownership of any percentage of the home that you sell. In exchange for that percentage, you will receive a lump sum payment. Because you lose ownership on the percentage sold, you also only benefit from value increases on the percentage of the home you still own.
+ Are Home Reversion Plans regulated?
Any lender that is involved in administering home reversion plans is regulated by the FCA, formerly known as the FSA, or Financial Services Authority. You should be entitled to a no negative equity guarantee with a home reversion plan with any lender regulated by the FSA, which means that if your home should sell for less than the amount still owed, your estate will not be held responsible for the difference.
+ What inheritance will I leave my children using Home Reversion?
The inheritance available to your children will directly relate back to the percentage of the home you sold. If you only sell a percentage of your home at outset, as opposed to the entire home, the remaining share is a guaranteed inheritance for your children, or other beneficiaries. So, if you sell 30% of your home, you and your estate will retain 70%.
+ Can I still move house after taking Home Reversion?
Yes, you can still move house after taking out a home reversion. However, the property must be eligible which means it must be of similar value and an acceptable construction type for the lender to approve the move.
+ How popular are Home Reversion Plans?
Lifetime mortgages now account for over 99% of the equity release market. Home reversion plans have become less popular for a number of reasons. The homeowner receives less than the market value of their home, regardless of the percentage they sell. This is partly because the homeowner is able to stay living in the home rent-free. The homeowner also remains responsible for the maintenance and upkeep of the full property. The homeowner also loses ownership over at least some percentage of their property and only benefits from any value increases on the share still owned.
+ Which lenders offer Home Reversion Plans?
Because of the decline in popularity of home reversion schemes, there are currently only two companies that offer these plans now. They are Bridgewater and Crown.
+ Can I repay a Home Reversion Scheme?
Yes, you can repay a home reversion scheme. However, if you want to purchase the percentage you had previously sold, you will have to do so at the current day’s price rather than the price you sold it for originally. This could be either good or bad, depending on the property market at the time you want to purchase the percentage back. More commonly, the home reversion loan is repaid when the home is sold.
+ Can I ever be evicted from my home?
No, you cannot be evicted from your home after taking out a home reversion plan. You can stay in the home for the remainder of your lifetime rent-free. You are responsible for all upkeep and maintenance of the property while living in the home.
+ Who pays for the ongoing maintenance to the property?
Even though you lose ownership of any percentage of your home you sell, you are still responsible for all ongoing maintenance and upkeep of the property. You are also responsible for insuring the property. That said, you are able to stay living in the property rent-free.
+ Do I have to pay rent to stay in my home?
No, you do not have to pay any rent to stay in your home. You are guaranteed a lifetime residency in the property and can still benefit from any value increases on any share of the property that you retain. You are, however, responsible for insuring the property and for making all repairs.
+ How much does it cost to set up a Home Reversion Plan?
There are a number of potential fees involved in setting up a home reversion. You should expect to pay a valuation fee, legal fees, application fee, and a fee to your adviser. The valuation fee covers the valuation that determines how much you sell your home for and it is suggested that you have this valuation performed by an independent valuator to ensure you receive as much as possible. It is required that the lender and the homeowner have separate solicitors which means you are going to have to pay some legal fees. And it is common that you would have to pay an application fee to the lender as well as fees to your adviser. Also keep in mind that you will be responsible for maintaining the property, which also comes with a price tag.