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Home Reversion Plans

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Home Reversion plans

How does a Home Reversion scheme work?

You sell your home in whole or part to a home reversion company for a lump sum or in return for a monthly income (or a combination of both). You have the right to continue living in your home rent-free (or sometimes for a nominal rent) for the rest of your life. When the property is sold – usually when you die – the reversion company takes its security. If, for example, you sold 50% of your property to the reversion company, it gets 50% of the proceeds – including any growth.

In addition, the reversion company will also only pay you a relatively small  percentage of the current market value for the share of your property it buys. This is because you continue to live in the property until you die and the company may have to wait years for its return. If you sell all of your property to the reversion company, for example, you will typically get between 30% and 50% of its current value. It will rarely be more than 60%. The actual figure will depend on your age(s).

Older people will get more, and men get more than women – because of differences in how long they are expected to live.

If you think that property prices will fall, then a Home Reversion plan could be a better bet than an Equity Release plan.

Plus points

• Usually, no ongoing repayments to make, the reversion company makes all of its money when the property is sold, although some schemes involve rent.

• You know at outset what share of your home (if not its value) you will be leaving to your family.

• You continue to share in any rise in the value of your property (unless you have sold its entire value).

• You can take extra cash advances, depending on the amount you originally took.

• If you are a smoker or have a serious illness, you may be able to get a bigger payment.

Minus points

• The reversion company will buy at a considerable discount to the current market value.

• If you die soon after taking out a plan, you could effectively have sold off your house (or a share of it) "on the cheap". Some schemes give families a rebate if you die within the first few years of signing up.

• Reversion companies can be selective about the properties they take.

• These are not generally "portable" if you decide to move home in future; the remaining equity may not be sufficient to purchase another property.

Our standard fee for researching and implementing a scheme is £500. This is payable half at application and half on completion.

We will receive and retain a procuration fee from the product provider as well.
 

Equity Release Help is a trading style of Asset Investment Management Ltd, Drayton Old Lodge, Drayton, Norwich, Norfolk, NR8 6AN
Independent Financial Advisers

Tel 01603 869988

Authorised and Regulated by the Financial Services Authority No 462797. Registered in England and Wales
company registration number 5880144.

Tax advice is not regulated by the Financial Services Authority

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