Home reversion plans are equity release schemes that essentially allow you to release some or all of the equity tied into your house without the need to sell the house or move out. As such, you can release equity as a lump sum or as regular monthly payments while continuing to live in the house until you die or move into a long term care home.
Home reversion plans involve selling a percentage of the property in exchange for a proportional cash lump sum. You retain the right to live in your house rent free for as long as you live. The plan ends when you die or move into long term permanent care, when the house is sold and the home reversion provider recovers their money from the sale of the house.
Most home reversion plans allow maximum release of equity by selling 100% of the property, but this is by no means mandatory. The amount you get depends on the percentage you sell, the valuation of the property and the age of the applicant. In general, the older the applicant is, the more money they can get, all other things being equal.
The most significant feature of a home reversion plan is that, as opposed to a lifetime mortgage, a home reversion plan is not a loan. The cash lump sum is obtained from the provider not as a loan but by transferring ownership of the property. As such, there are no monthly repayments, or interest payments on the amount you receive.
While home reversion involves selling a percentage of the house, you have the right to live in the house rent free until the plan ends. Home reversion is therefore the only equity release option that allows you to sell a portion of the house in exchange for a lump sum, involves no monthly repayment, and to retain the right to live in the house rent free until you die or move into long term care.
There are currently three providers of home reversion plans on the market: Hodge, Bridgewater and Newlife Mortgages. All three plans have their own terms and features that make them unique and therefore suitable to a variety of people.
For instance, when you sell a portion of the house to a home reversion provider, you do not normally benefit on any appreciation in the value of your house on that portion of the house which you sold. But Bridgewater offers a House Price Inflation Protection on their plan, which allows a customer or their estate with 50% of the increase in excess of 7.5% real house price inflation, at the point of sale.
The main feature of home reversion plans is that it allows you to continue living in your house while accessing the equity tied into the home as a tax free lump sum. There are no repayments or interest payments on the lump sum, and the amount is recovered by the provider when the house is sold.Tags:Bridgewater, Equity Release Option, Equity Release Schemes, Hodge, Home Reversion, Home Reversion Equity Release, Home Reversion Plans, Home Reversion Provider, House Price Inflation Protection, Lifetime Mortgage, Long Term Care, Long Term Care Home, Long Term Permanent Care, Newlife Mortgages, Release Equity, Release of Equity