Home Reversion Schemes

Home reversion schemes and plans allow homeowners to tap into the value of their house and live in it until their death.

A home reversion scheme means that you sell your house, usually at a discount to an equity release firm. In return they allow you to:

• Live in the home until your death.
• Give a % of the equity in the house, that you can use for your retirement.

At death, the house is sold to reimburse the lender, the remainder of the cash is then distributed to the heirs in the will.

The advantage of Home Reversion schemes

1. Low risk way to borrow money
2. Home value is secured.
3. Attractive in periods of falling house prices or stagnant house prices
4. You can choose between a lump sum and an annual income

Disadvantages of Home reversion schemes

1. You will be able to leave less in your will.
2. If house prices rise, you will not benefit from the equity gains.

Checklist before Taking out a Home Reversion Scheme

• Do you need the equity withdrawal?
• Consider the impact on your inheritance
• Consider whether you would be able to afford care or live in an old person’s home.
• Consider other options to equity release, especially if not retired
• Take independent advice

More on Mortgage equity withdrawal

Effect of falling house prices