Reversion Schemes

Home Reversion Schemes

This type of equity release scheme allows you to sell part or all of your legal ownership of your property now to a provider in return for either an immediate discounted lump sum, or income. You will also receive an agreement which legally guarantees that you can continue to live in your home rent-free, or for a nominal monthly rent, for as long as you wish. In some cases a peppercorn rent is payable but it will not normally be more than £10 a year. This rent is fixed for the term of the lease and can never be increased.

You can sell up to 100 per cent of the value of your property, but you will only receive a discounted sum of money as unlike lifetime mortgages interest is not added as you go along, but to allow for you to remain living in your property rent free for life, they will only give you a percentage of the market value. This discounted sum could be as low as 25% per cent of the current market value at age 65, rising to typically 60% at 91 years of age. The proportion of your home’s value you receive depends upon your age, sex and health - the older you are, the more you will receive, and a male receives more at any given age than a similarly aged female due to men having shorter life expectancies.

Likewise regardless of sex the lower your life expectancy, the more you will receive.

For example, let's say your house is currently worth £260,000. If you agreed to sell 50% (equivalent to £130,000 based on current value) and because of your age you receive a rate of 40 per cent, you will only receive £52,000. If the house is then sold after 15 years, and is then worth £400,000, the lender collects 50 per cent of this amount, which is £200,000.

The provider discounts the amount of cash as compensation for the fact that they may have to wait many years before receiving their money back on your (or in the case of joint applications, the last persons) death or need to move into care. When the house is eventually sold, the lender receives their agreed percentage of the eventual sale price, not just the market price at the time the arrangement was agreed. This can be advantageous to you if you feel house prices are likely to fall as unlike Lifetime mortgages, if the value does fall, the amount belonging to the reversion company also decreases.

This is a home reversion plan. To understand the features and risks ask for a personalised illustration

If you would like us to calculate how much you could release based on your specific circumstances, then please complete our online enquiry form and we will call you back.