If so, a home reversion scheme might be right for you.
A home reversion plan is a type of equity release scheme where you sell all or part of your home in exchange for money to fund your retirement. Although you will no longer own 100% of your home, you are guaranteed the right to stay in your home rent-free for the rest of your life.
Unlike lifetime mortgages, home reversion plans are not a loan, so you have no interest or repayments to pay back. Instead, the equity release company benefits from their share of your property when your home is sold after your death. Your share of your property’s value will go to your benefactors as an inheritance.
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You can sell up to 100% of your home, but you will not be given the full amount of your property value. Basically you are selling your home for a discount that is far less than its actual worth. The home reversion provider will purchase their share of your home at a percentage of the current market value. Usually your provider will offer you 30% to 50% of the market value for their share of your home. Providers will very rarely offer more than 60%. Although these percentages sound low, remember that you are living in your home rent-free for the rest of your life (some providers may offer you a slightly higher percentage but charge a small rent).
You can either sell a share of your property for a lump sum, a monthly income, or a combination of the two. You may even be offered a drawdown option which allows you to sell shares of your property in stages as opposed to all at once. Since home reversion schemes are not loans, you will usually save money by not paying an arrangement fee as you would with a lifetime mortgage.
The older you are, the closer you can sell a share of your home at market value. Your home reversion provider wants a quick return on their investment, so they will offer you a better deal if you have a shorter life expectancy. For this same reason you can get a bigger payout if you are a smoker or have a serious illness. Since the provider is allowing you to live in your home rent-free, you will benefit the most from home reversion schemes if you live a long life.
If you passed away right after taking out a home reversion scheme you would basically have sold your home for a very cheap amount. However, some equity release companies will give your family a rebate if you pass away within a few years of taking out your home reversion plan. Talk to a professional adviser to determine what companies protect you and your family in this way.
No. Although you won’t own 100% of your house anymore, you are guaranteed the right to live there for the remainder of your life. You are also in control of how much of your home you sell. Therefore, you are never in danger of losing any inheritance you want to pass on after your death. Your benefactors will have a guaranteed inheritance based on the percentage of your house you still own. Of course, if you don’t have dependants you can use your equity to its full advantage by selling 100% of your property while living rent-free and having access to cash.
Just fill in this short form and a mortgage adviser will contact you to answer all of your questions, give you home reversion advice, and get you on your way to earning money towards your retirement.
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