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When it comes to releasing equity from your home, lifetime mortgages and home reversion plans are two of the most common equity release options available for homeowners aged 55 and over.
While both allow you to unlock the value in your property, they operate in different ways and suit different financial goals. Understanding how these products compare is essential for making an informed decision that aligns with your long-term needs.
A lifetime mortgage is a loan secured against your home, allowing you to access a portion of its value as tax-free cash. You retain full ownership of your property and typically don’t make monthly repayments.
Instead, the loan and any accrued interest are repaid when the property is sold, usually when you pass away or move into long-term care.
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A home reversion plan involves selling a share or all your home to a reversion provider in exchange for a lump sum or regular payments. You retain the right to live in the property rent-free or for a nominal fee for the rest of your life, but you no longer own the full property.
| Feature | Lifetime Mortgage | Home Reversion Plan |
| Ownership | You retain ownership. | You sell a share or all your home. |
| Loan vs Sale | It’s a loan with interest. | It involves selling equity outright. |
| Flexibility | Options for lump sums or drawdowns. | Typically offers a single lump sum. |
| Inheritance Protection | You can reserve part of the property. | Reduced inheritance unless pre-agreed. |
| Costs | Interest accrues over time. | No interest, but property value growth benefits the provider. |
| Eligibility | Available from age 55. | Often requires higher minimum age (usually 60+). |
Advantages:
Disadvantages:
Advantages:
Disadvantages:
The choice between a lifetime mortgage and a home reversion plan depends on your personal circumstances, goals, and financial priorities. Consider the following questions:
Lifetime mortgages often appeal to those who wish to maintain ownership and benefit from potential property appreciation, while home reversion plans may suit individuals who prioritise no-interest solutions and guaranteed housing for life.
Both lifetime mortgages and home reversion plans come with unique benefits and considerations. Before making any decisions, it’s essential to seek professional advice tailored to your circumstances.
A later-life mortgage specialist can help you explore the options, understand the terms, and choose the product that best meets your needs.
If you’re considering equity release and would like expert guidance, get in touch with a qualified advisor today.
Here at UK Moneyman Limited we provide truly independent mortgage advice and we will consider all alternative mortgage options before equity release.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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