A Home Reversion Plan involves you selling part or all of your property in return for a cash lump sum and a lifetime lease – in other words, the right to remain in your property rent free until you die (or the death of the second owner if it is a joint application) or you move into long-term care or sheltered accommodation.
Unlike a Lifetime Mortgage the money you receive is not a loan so you pay no interest on it. The home reversion plan provider owns a proportion of your property and takes their share of the sale proceeds when the property is eventually sold.
Advantages of a home reversion plan
- Home reversion plans usually provide a higher maximum amount than lifetime mortgages.
- There are no monthly payments.
- Any unsold share of the property provides a guaranteed inheritance to your beneficiaries.
- You benefit from any increase in value of the proportion of the property you still own.
Disadvantages of a home reversion plan
- Minimum age of 65 compared with 55 for a lifetime mortgage.
- If you die soon after taking a home reversion plan it can be a very expensive option.
- The home reversion provider owns a share of your home and they will benefit from any increase in the value of that share.
- Home reversion plans can only be repaid by purchasing the property back at its full market value.