February 1, 2016

Home Reversion Plans

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.

 

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