A home reversion plan is a form of equity release, where you sell your home – or a percentage of it – in return for a lump sum of money, a monthly income, or both. Your home gets sold to a reversion company, and effectively you become a tenant in your own home. Even though you are a tenant you are still responsible for maintaining the property and paying any bills.
How does it work?
With a home reversion scheme the reversion company will take on legal ownership of the property (or a share of it). Usually you will receive between 20 per cent - 60 per cent of the value of your property, depending on your age. While the reversion company will own the property, a legal document called a Lifetime lease guarantees they cannot sell it until after you and your partner have died, or moved into long-term care.
It’s important to note that you do not have to sell all of your property. For example you can choose to sell only 50 per cent of the property meaning the reversion company will own half and you will own half. Then if you and your partner died, the house would be sold with 50% of the money going to your heirs and 50 per cent going to the reversion company.
Make sure that the home reversion plan you are considering carries the Equity Release Council logo, which means that it abides by the Safe Home Income Plans (SHIP) code of conduct.
If you are considering home reversion, it’s worthwhile speaking to a financial adviser who can help to talk you through your equity release options and any alternatives available to you, to get the best outcome for you. Find an IFA.
Questions you might like to ask a financial adviser …
- What’s the minimum share in my home I can sell?
- Would a lifetime mortgage be more suitable for me?
- Does this plan comply with the SHIP code of conduct?
- What other ways I could access money, without using equity release?