When is the Best Time to Apply For a Home Reversion Plan?

There are many factors to consider when applying for a home reversion plan. In order to understand the best time to apply for home reversion, it is necessary to understand how home reversion plans actually work.

A home reversion plan is an equity release scheme that allows you to tap into the equity or value of your home without the need to liquidate the property. You sell a portion of the house to the home reversion lender whom by way of an equity release calculator result will establish a proportional equity release in the form of a cash lump sum. The home reversion provider buys a proportion of the property from you, and receives this proportion from the sale value of the house.

Thus, a home reversion plan is linked not only to the equity release market, but also the property market. As such, it is important to consider both these markets to find the best time to apply for a home reversion. When you sell a portion of the property to the provider, you lose ownership of that portion. So, if your house appreciates in value over time, you still do not benefit from this increase in value, on the percentage that you have already sold to the provider.

Home reversion therefore offers poor value when the property market is soaring, as you sell a portion of the house at less than market value to the reversion provider and do not benefit from the value appreciation on your property. However, when the market is in a slump, this feature can work to your advantage as you pass on the risk of falling house prices to the provider. Therefore, home reversion plans generally tend to offer better value when the property market is down and prices are falling.

Another factor to consider when deciding the best time to apply for home reversion is the valuation of the property. How much you get for the percentage you sell depends on your age, the percentage you sell and the property valuation. If property prices are just beginning to pick up, it may pay off to wait until they have picked up when the home reversion provider valuates your property.

Deciding the best time to apply for home reversion can be quite tricky, especially as it is linked with the equity release market, as well as the property market. The most appropriate time to apply also depends on individual circumstances, such as age and other financial circumstances. It is advisable to consult objective and impartial professional advice before making any such decision.