Home reversion plans offer a way to release significantly more from your home than a typical equity release product or lifetime mortgage. Unlike most types of equity release that act as type of loan and charge interest, home reversion allows you to sell off a stake of your property and there is no interest charged.
A home reversion scheme allows you to access a much bigger lump sum which is completely tax-free. You are also able to still remain in your house for the rest of your life or until you go into long-term care.
However, it means that have essentially sold off your property, at a price usually lower than market rate, and therefore you will not gain any financial benefit if the property increases in value during your lifetime.
Equity Release Online has access to whole of market rates, allowing you to enter your details and get the best home reversion plan offers available in the UK. Or, you may find that there is a more suitable lifetime mortgage or equity release option for you. Our application form takes just a few minutes to be complete online and the results will be tailored according to your requirements.
You agree with the home reversion provider that your house is worth £500,000 (this might be below market rate) and you opt to release 50% through a home reversion plan. You will receive £250,000 in one lump sum upfront and continue to live in your home until you die or go into care.
When the house is sold on the open market, the provider will take their 50% stake and their share. Any funds remaining will go to your estate and to your children as inheritance.
Home reversion plans are less commonly used and many households prefer to release equity through lifetime mortgages. With a lifetime mortgage, you are able to continue to live in your home and still own 100% of it. You are able to draw down money as and when you choose and just pay interest on what you release (meanwhile there is no interest with home reversion plans).
Most households are able to release between 35% to 50% of their property’s value through lifetime mortgages, however, it is generally far more flexible and allows you and your children that inherit your estate to benefit from future increases in property value.
|Home Reversion||Lifetime Mortgage|
|How much you can release from property||50% to 100%||35% to 50%|
|Interest charged||Zero||Around 5%|
|Early exit fees||High||Not as high|
|Maintain ownership in your property||No||Yes|
|Benefit from future property value increase||No||Yes|
With a home reversion plan, you are able to put money aside for your children as inheritance. This will be made available to your children when you are no longer using the property, it has been sold and the home reversion provider has taken their share.
With other equity release products, the inheritance is likely to be more since you will be owning 100% of the property and be able to pass on any increases in the value of the property too.
Whilst home reversion is less frequently used, it can be useful for some homeowners. For instance, if you do not have children or maybe passing on inheritance is less of a priority, home reversion will allow you to maximise the amount you can release from your home.
In addition, if you are reaching the later stages of your life, you get to take advantage that the amount you can release is even higher. Plus, if the property market or the condition of your home is poor and you think you will struggle to sell it, using this form of equity release could be a viable option.
Equity Release Online can offer you free and simple home reversion quotes. We are passionate about finding the right thing for the customer, so once you have received your quote and are ready to proceed, you will be able to speak directly with one of our advisors who can provide further assistance.
Our goal is to what is best for you, helping you release the most equity possible, with the most flexibility and best rates too. This might mean using an alternative to home reversion and using one of the many types of equity release now available. To get started with no obligation, simply click on the apply now button below.