With a home reversion plan you sell part or all of your home to a reversion plan company in exchange for a tax-free cash lump sum. You also gain a guaranteed lifetime lease with no monthly repayments to meet.
You stay in your home rent free for as long as you choose and are able to guarantee an inheritance to your beneficiaries. Both you and the reversion scheme company share in any increase in your property’s value, providing you have not exchanged 100% of its value.
There are two types of Home Reversion Plans. The first, which we call ‘discounted home reversions’ does not pay you the full market value for the share in your property you sell. They simply buy a share of your property for less than the market value and recoup the market value of that share when the property is ultimately sold.
The second type, which we call ‘non-discounted home reversions’ the provider does pay you the full market share. In exchange, their share will increase each year by a percentage which is specified at the outset.
Typically, the minimum age for a home reversion plan is 65 although they can be available to younger ages. Please ask us for details.
Advantages of a home reversion plan
- You are able to guarantee an inheritance
- There are no monthly repayments to make
- You benefit from any increase in value of the percentage of the property that you still own
- Reversion plans may be available to those aged 55+ and you can typically raise more money from your home at a younger age with a reversion plan than a lifetime mortgage would allow.
- The older you are, the more money you will be able to release with a reversion plan
Disadvantages of a home reversion plan
- Typically, you do not receive the full market value of the share of the property you sell because the reversion plan company will give you the absolute right to live in it rent free for the rest of your life, and will not get their money back for a number of years. Some plans do offer you the full market value, please ask us for details.
- The reversion plan company owns a share of your home and will also benefit from any increase in value.
- Reversion plans cannot usually be reversed as you are selling part of your home
- The majority of reversion plan providers do not guarantee further advances