Thinking About Using Home Reversion to Pay for Your Care?

While a house can be a huge financial asset, it can only practically be a financial asset when it is turned into usable cash. It is common for people to own a home worth many thousands of pounds, but have insufficient cash flow in day-to-day life, or not have enough savings to meet large one off expenses. For homeowners who are strapped for cash but are living in a house worth a significant amount, equity release provides an alternative to selling the property and downsizing.

As people are living for longer, costs associated with old age and retirement are on the rise, and the cost of care is the most significant expense during retirement. With rising costs of living and ever reducing public spending, more and more people are struggling to meet the expenses of long term care.

Home reversion is a way to sell a portion of the value of the property in exchange for a cash lump sum. This lump sum is tax free and there are no restrictions on what you can use it for. Although you can sell a part of or your entire property in exchange for cash, you still retain the right to live in the house, rent free for as long as you live, or until you move into long term care.

Once the customer has died or moved into long term care, the home is sold, and the home reversion provider recovers the amount proportional to their ownership of the house, from the sale value of the home. As long as you, or in case of joint applicants, one of the partners is living at the property, the lump sum released can be used to meet the costs of your care.

Home reversion plans generally offer a bigger lump sum than lifetime mortgages can, all other things being equal. This can make them a more attractive option than lifetime mortgages, especially for people who need a large lump sum to pay for their care.

Flexible home reversion plans such as Bridgewater’s flexible release plans make it possible to release the entire value of the home while also opting for additional safety features such as the early vacancy guarantee. The drawdown like nature of Bridgewater’s secure escalating release plan can make it suitable for those who want to pay for care now, and need additional guaranteed release thereafter.