Home reversion involves a company buying your home or a part of it for a cash lump sum or an income. If you get a cash lump sum you may decide to invest this yourself in order to provide an income.
You will have the right to stay in your home rent free until you die or you move into care and you don't need to make any monthly repayments.
You will usually get between 30% and 60% of the market value of your home depending on the circumstances, because:
- You will be allowed to carry on living in your property rent free
- the buyer will not be able to sell your property until you die or move into care
Home reversion schemes were very popular until Lifetime mortgage Equity release schemes were introduced, but now only make up approximately 5% of the equity release market. They can still be useful where people want to make sure that they leave some capital to their family as only part of the house needs to be sold to the Equity Release company.
All Equity Release Council approved Home Reversion Plans allow you to move home, although this will be subject to the new property being suitable to the provider. The amount you receive for the share you sell is based on your age. The younger you are the longer you will be likely to be living in your property rent free so therefore the cash sum offered by the provider will be less.
Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration.
Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.
Check that this mortgage will meet your needs if you want to move or sell your home or want your family to inherit it. If you are in any doubt seek specialist advice.