Home Reversion Plan

A home reversion scheme is a type of equity release mortgage borrowing aimed at older people, where the homeowner effectively sells a proportion of their property (or indeed the full property) for a cash sum which would typically be below the property value.

As part of the home reversion scheme terms and conditions, the seller is then allowed to remain in the property, usually rent free for the rest of their life or until they move into long term care or die.

There are alternatives to home reversion schemes such as a remortgage, a retirement interest only mortgage, or a lifetime mortgage etc.

Home reversion schemes are not assessed on affordability like regular mortgage applications, therefore lower income, low credit score, being self-employed, or complicated situations are likely to be accepted.

The amount you can borrow on a home reversion scheme will depend mainly on your age, health, and property construction.

Home reversion simply means that you sell your home (or possibly a proportion of the home) for a cash lump sum, and the home reversion provider then allows you to continue living there until you die or go into long term care.

The plan provider will then sell the property and retain the proceeds when you die or move into long term care.

Home reversion is typically available to clients over the age of 65 and usually no interest payments are required.

How much money you can get on a home reversion is not based on affordability like traditional mortgages, they are more based on your age and property type/build etc.

Yes, you can sell half your house if you’re looking to raise money.

If you’re over the age of 60 you will likely have the option to sell any proportion of your house typically from around 25% up to 100% at below market value to raise money or increase your income.

You should be aware that with home reversion you would not receive the same value as you might expect if you were to sell on the open market, but that is because you do not have to vacate the property as the plan provider allows you to remain in the property for the rest of your life or until you go into long term care.

The money you raise can be paid to you as a lump sum or as a regular income depending on your personal situation and needs.

Home reversion should be considered along with the other later life mortgage types that are available in the retirement mortgage range.

Yes, possible, most home reversion plans are portable and allow you to move home if required.

Reasons that some clients choose to move home after doing a home reversion plan is to downsize into a smaller property.

Home reversion plans should not be entered into lightly and if you are thinking of moving soon, therefore, it’s important that you talk through your situation with an experienced mortgage broker to discuss other products that may be more suitable.

A home reversion plan means that you sell your home, or a proportion of it, to the plan provider.   Home reversion plans are available to customers usually over the age of 60+ looking to release cash or increase their income whilst wanting to stay living in their home.

You can expect to receive less than the market value but in return you will be allowed to remain in the home for the remainder of your life or until you enter long term care.

A home reversion plan is part of a wider range of later life lending over 50s mortgage solutions.

Home reversion plan providers are not ones that you’ll find on the high street or online.

Home reversion plans are accessed through whole of market mortgage brokers, like us, who can provide advice on the full range of later life lending solutions.

Home reversion plan providers will be more interested in the type, construction, and condition of your property rather than your income and outgoings like standard mortgages.

An in-depth survey and valuation will be carried out to assess whether the home reversion plan provider will buy the property and for how much.

Yes, you can get a home reversion plan with bad credit. There is no requirement to make payments, your credit profile has no bearing upon what you might receive.

The only factors that will influence the amount you may receive on a home reversion plan, are your age, and the condition and value of the property.

The advantages of a home reversion plan are:

• You can release equity from the value of your property to pay for care or living expenses.
• Joint home reversion plans are available, all parties must be in agreement to the application.
• Most home reversion plan providers are part of the equity release council therefore they offer a no negative guarantee meaning you’ll never owe more than the value of your home.
• Most providers offer portable plans meaning that you can move home if you wish.
• You can stay in the property via a lifetime lease usually rent free until you die or move into long term care.
• You avoid the inconvenience of having to move home.
• The money released is tax free and can be taken as an income or as a lump sum.

The disadvantages of a home reversion plan are:

• You will receive less than the market value of your property and, depending upon your age that can be considerably less.
• There will be fees involved, typically property maintenance, valuation, mortgage advice, legal, and survey.
• You would reduce the value of your estate any potential inheritance value for your family.
• Flexibility, home reversion schemes are not as flexible as other equity release types such as a lifetime mortgage.
• You will not benefit from any property rises in the future should house prices increase.
• The funds received could affect any means tested benefits that you receive.
• If you did decide to end the plan early, you would have to buy back the property at full market value, even though you’d sold it at significant discount.

The maximum percentage you can sell is 100% of the value of the property.  However, the property value might be less than you would receive on the open market if you wanted to move out.

You can also sell a lower proportion also with home reversion plan providers typically start from 25% up to the maximum of 100%.

There may be more suitable products available to you that will allow you to release equity such as an interest only mortgage or an equity release mortgage.

The age limits on a home reversion plan can vary slightly from provider to provider but the typical minimum age is 60 and there is no maximum.

The older you are or if you have ill health, you’re likely to receive more money from your property.

If the property is jointly owned, both applicants would need to be accepting of the application and terms would be agreed for both applicants to remain in the home.