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What is a Home Reversion Plan?

A home reversion plan is a type of equity release scheme that allows homeowners to sell all or part of their property to a reversion company in exchange for a lump sum or regular payments. Unlike a lifetime mortgage, you retain the right to live in your home rent-free until you pass away or move into long-term care. Home reversion plans are regulated by the Financial Conduct Authority (FCA), ensuring consumer protection and oversight.

Key Features and Benefits

  • Lump Sum or Regular Payments: Choose to receive a lump sum or regular payments based on the value of the portion of your home you sell.
  • Rent-Free Living: Retain the right to live in your home rent-free for the rest of your life or until you move into long-term care.
  • No Interest Charges: Since you are selling a portion of your home, there are no interest charges as with a lifetime mortgage.
  • Flexibility: You can sell a portion of your home initially and retain the option to sell more later if needed.
  • Guaranteed Occupancy: Continue to live in your home, with the guarantee that you cannot be evicted.

Factors to Consider

Eligibility

Home reversion plans are typically available to homeowners aged 65 and over. The amount you receive depends on your age, the value of your home, and the percentage of the property you sell. Make sure your property meets the lender's criteria, which often include the type and location of the property.

Costs

Understanding the costs associated with home reversion plans is crucial. While there are no interest charges, there may be fees for arranging the plan, valuing your home, and legal costs. Additionally, since you are selling a portion of your home at a discounted rate, the amount you receive will be lower than the market value of the portion sold.

Impact on Inheritance

Selling a portion of your home will reduce the value of your estate, which means you might leave less to your loved ones. It’s important to discuss the impact on your estate with your family to ensure everyone understands the implications.

Impact on State Benefits

Taking out a home reversion plan can affect your eligibility for means-tested state benefits. The additional income or savings may reduce the benefits you receive. It’s crucial to discuss this with an adviser to fully understand the implications.

Advice

Seeking professional advice is essential when considering a home reversion plan. An adviser can provide personalised recommendations based on your situation and goals. They can help you understand the pros and cons and find the best plan for you. Speaking to an adviser is crucial to ensure you are making an informed decision.

Next Steps

Choosing the right home reversion plan can be complex, but getting expert advice can make it easier. By understanding your specific needs and circumstances, an adviser can help you find the best plan that provides access to your home’s equity.

Interested in learning more about home reversion plans? Speak to a knowledgeable adviser who can guide you through the process and help you make the right choice.

Get Expert Home Reversion Plan Advice Now

Frequently Asked Questions

A home reversion plan is a type of equity release scheme where you sell all or part of your home to a reversion company in exchange for a lump sum or regular payments. You retain the right to live in your home rent-free for the rest of your life or until you move into long-term care.

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*Example rate shown is from Hodge with a rate of 6.05% (12/09/2023). The rates shown are for illustrative purposes only, they should not be taken as any form of advice or recommendation. Actual mortgage quotes are based on individual circumstances.

  1. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.