Home Reversions- What Exactly Are They?

Home reversions are famous schemes in the UK. It allows you to sell your complete home or particular parts of your home and get a lease for lifetime. This lease allows you to stay in the home for as long as you wish. Whereas the company which is doing the reversion buys that part of your place with a lump sum amount of money. And If God forbid you die, full realizable proportion that you sold goes to the company and res of the part is given to your property.

As a matter of fact, the received money by the reversion company depends on your age, life expectancy and your health. If you are suffering from a life threatening disease or overall your health is not in a promising condition then you might get a far better deal from the scheme.

It all depends on the terms and conditions of your home reversion plan. You might get allowed to stay at your place like a rent free tenant for as long as you would live. But you still will be responsible for all kind maintenance and repairs of your property.

If the property market is facing a boom, then the reversion plan would eventually benefit the mortgage provider. Let’s say, if your home values £240,000 and as a couple you both are of the age of late seventies. You plan to sell half the portion of your place to a mortgage provider. But he would not give you even the half which would be £120,000 as you will be living at your place for as long as you both shall live. The mortgage provider would pay a discounted sum of around £65,000 for the share of 50% of the place you’re selling to him.

And if at some point, the property is sold for let’s say £450,000, they would claim the 50%; that would be around £225,000. And in between if the property market faces a boom; the mortgage providers would substantially make a profit of £160,000. But if the property market faces a slump, it would eventually result in your equity of the property being negative. In such a condition, the mortgage providers would lose from home reversion plans if the actual value of property goes below £130,000. This way their share of 50% would not worth much as they have already paid £65,000 for the property.

On the other hand, the reversion plans makes you sure about the inheritance that you would be leaving for your beneficiaries or children. As mentioned in the example, on the event of the death of owners, their part of the share would go to their inheritors.


For information, help and independent financial advice on home reversion plan call our specialist team of advisers or visit http://www.equityreleasesolutions.co.uk/home-reversion