Home Reversion Plans
Home reversions involve selling part, or all of your home to a home reversion provider.
In return, they will give you an income for life and sometimes the option of a lump sum. If you choose a home reversion, all or part of your home will belong to somebody else. You remain in your home for the rest of your life rent free (or for a nominal rent, which is often referred to as a 'peppercorn rent')
If you have sold 100% of your home to the reversion company, when you and your partner die the property will be sold and the company will receive all the proceeds. Otherwise the value of any portion of your home that you have not sold will pass to your estate.
ADVANTAGES:
- You know what proportion of your home will be used at the outset.
- You can leave a fixed proportion of equity to your estate
- Normally a large proportion of the equity you release provides a lifetime income
- Regulated by the Financial Services Authority
DISADVANTAGES:
- You become a tenant in your own home as you have to transfer ownership of your property
- As it normally provides a lifetime income, the total amount paid out by the reversion company will depend on how long you live
- You only benefit from any rises in house prices on the proportion not entered into the plan (i.e. the percentage of your home that you still own)
- If you choose to end the plan early, charges may apply
- Your tax position and eligibility for means tested benefits may be affected, as might your options for moving or selling your home in the future.