A home reversion scheme is where you are able to sell your house or part of it to a home reversion provider and in doing so you are able to release equity that would otherwise be tied up in your home. You can choose to either receive this equity in one large sum or to have it released monthly as a regular income. You are able to agree to a set amount of how much you will receive each month. There are certain advantages and disadvantages of these home reversion schemes, which is why you need to find the best plan for you.
You can also select to have a blend of both of these where you can receive an initial lump sum and then the rest will be paid to you each month. This money can be used how you like and you will only need to sell your home at the end. The part of your house that is sold belongs to the home reversion provider and the rest can be used for an inheritance. They can only recoup their money from the share of the house they own.
A home reversion provider will provide 20 to 60% of the home value based on the portion you sell. At the time you move out or die, the entire home is sold and the portion you retained ownership on is what your beneficiaries will inherit. The amount inherited is generally the same percentage of value as given in the original agreement. It is based on the current market value of the home.
If the home increases in value the percentage that remains should increase the value given to your beneficiaries. While they get a percentage like 20 to 60% for the remaining portion of the house, it is due to valuation changes that determines the actual payout.
People who are looking at home reversion schemes will have different needs. This means that one policy may not suit everyone. Home reversion providers then offer different home reversion schemes for a customer to choose from. They will differ in terms of interest, how much equity can be released, the minimum amount of your house that can be sold, the value of your house and other technicalities. This means that you should not just jump into a policy but rather weigh up all your options.
Be aware that home reversion schemes are called home equity releases and lifetime mortgages. A lifetime mortgage is a loan that accrues interest, which is different from selling a portion of your property. If you sell your property and gain funds you do not have a loan to pay back. The lifetime mortgage will have a principle and interest to pay back since you did not sell the home.
It is important to shop around just like with anything. Compare different policies that a home reversion provider offers as well as different home reversion schemes from different providers. A simple way to compare home reversion plans is to look online. Different companies post themselves online and other sites are able to source the best deals and various policies. These are then listed and compared for you. Also, sites will allow you to sign up to them and based on your details and needs they can source a home reversion scheme that suits your needs.
When comparing the different schemes, look for SHIP agents as the UK government has set up a regulatory authority to oversee home reversion providers. Someone on the SHIP list is a trustworthy company that will work with you and provide a fair agreement based on the type of home reversion scheme that will work best for you.
Once you have found a home reversion scheme that suits you, you can call the company that is offering it and make an appointment. You can then get a comprehensive run through of the policy. Make sure that you understand the complete policy and that it suits your needs before you sign on the dotted line. To first find your potential plan we recommend visiting www.HomeReversion.org.
You may also want to take a moment and utilise other online tools from the company’s website like a home reversion calculator or interest-only lifetime mortgage calculator. Both calculators can highlight the expenses and amount of equity you may receive from the home equity release plan you are interested in.
Most consumers interested in home reversion schemes find it helpful to explore the different options, including the expenses and potential payout before setting up a meeting at a home reversion company.