What is a Home Reversion Plan?
A Home Reversion Plan allows you to sell a share of your property (or all of it) to a Reversion Company in exchange for a lump sum.
Home Reversion Schemes will usually offer less than the full market value of your home. This is typically somewhere between 20% and 60% of its value. The reason for this is that the buyer cannot re-sell the property until you, or any surviving joint applicant, dies or moves out, for example to go into long term care.
Some Home Reversion Schemes will offer to reinvest the cash lump sum for you in order for you to receive a regular income, or you could seek advice and do this yourself.
Due to their nature, the older you are when you apply for a Home Reversion Plan, the higher the percentage you will receive. The minimum age for qualification for a Home Reversion Plan is usually higher than that of a Lifetime Mortgage.
You will no longer own all or part of your home but can continue to live in your property for the rest of your life as a tenant. This would usually be established under a formal lease agreement. You will still be responsible for the property and all bills relating to it, so you may need to set aside money for this.
It is usual with most Plans that you do not have to pay rent or if you do, it is only a minimal amount. Some Plans, however, will allow you to pay a rent in return to receiving more money from the sale.
The Reversion Company would then sell the property in the event of the death of the last borrower (if a joint application) or the last person moved out and they would receive the proceeds as a result, including any growth in the property value.
If you continued to own a percentage of your property as part of the Home Reversion Plan, you would receive your part of the sale proceeds (including any percentage of any growth in the property value) or they would be paid to your estate (beneficiaries) as appropriate.
Home reversion plans are high-risk products. They could have major implications for tax, benefits, inheritance and your long-term financial planning.
It is important that you seek the right advice to ensure this type of plan is suitable for you.
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