Home reversion schemes requires the owner to sell part or all of their property. The capital given in this scheme can be a greater lump sum offered by their counterparts - the lifetime mortgage. It is a common misconception that the property is valued at lower than normal. However, the valuation should be undertaken & estimated by an independent evaluator. One positive aspect of home reversion is the aspect of guaranteeing an inheriatnce to your heirs. For many this is of paramount importance & effectively rules a lifetime mortgage a non-starter.

The home reversion scheme offers a sense of re-assurance which is not offered significantly by many other equity release schemes. Enhancements in medical science have resulted in human population increasingly living much longer. Thus, age of the youngest homeowner plays a major role in this type of equity release plan. The simple equation is that the older the property owner, the greater lump sum offered as a release of equity.

There are many more features to home reversion plans, one being that you will be allowed to continue living in your home, rent-free, for the rest of your life. (more...)

The two common misconceptions about home reversion schemes are that you are required to sell 100% of your property to the loan provider, and second, that you cannot release the full amount of equity from your house. Both of these are false.

It is not mandatory to exchange 100% of your house to the equity release provider, however, should you wish to, there are home reversion plans that allow you to do exactly this. Most home reversion providers have plans with options ranging from 25% to the full 100% exchange of the property in return for an amount of tax free cash.

Home reversion schemes are a type of equity release, whereby you can release or tap into some of the value that is built into your home. However, unlike lifetime mortgages, home reversion involves transferring ownership of the portion of the house to the provider in an exchange of equity, on which you pay no interest whatsoever. (more...)

We have seen a decline in the Home reversion market in recent years. While equity release in general seems to be a rising trend, home reversion has not seen a similar surge in popularity. This may be due to the fact that a number of more flexible plans and schemes are now available on the market that mitigate the disadvantages and risks associated with home reversion plans.

As such, many companies that used to offer a home reversion calculator on their website have now chosen to withdraw the application. For instance, Retirement Plus, offered a home reversion calculator which is no longer available. Bridgewater also offered a similar tool on their website, which has also since become unavailable.

While home reversion schemes do prove to be the right solution for some people and do have their own advantages, they also have disadvantages. For instance, home reversion providers usually offer discounted prices, so the client does not receive full market value of the share they sell. Should the price of your house rise significantly in the future, you receive no benefits of the rise on the share you have sold. (more...)

As is true with any financial scheme, there is no single home reversion plan that suits everyone, irrespective of their needs. The home reversion plan that works best for you will depend entirely on your circumstances and your priorities, as different plans have different features. Let’s look at the two main home reversion plans currently available on the market – the Bridgewater flexible release plan, and Hodge Lifetime shared growth option.

A subsidiary of Grainger Trust PLC, Bridgewater Equity Release offers a home reversion plan with flexibility at its heart. The flexible release home reversion plan allows clients to sell a portion of their house in exchange for a lump sum equity release. Clients can sell anything from 25% to 100% of their house in exchange for a cash lump sum.

The minimum amount that can be released is 25% or £25,000, depending on which is lesser. Most home reversion plans are available after the age of 65 years, and this is also the minimum applicant age for the Bridgewater flexible release plan. If you do not release 100% equity, you have the option of releasing more at a later date. (more...)

Home reversion schemes did once dominate the equity release landscape. However, over the decades with further innovation and regulation of the equity release market their numbers have dramatically dwindled, almost becoming an extinct species. Here we discuss the rationale behind this and why home reversion UK plans still have a part to play in the equity release market.

Hoem reversion plans provide a lump sum or income. The amount you receive is not essentially a loan and there is no interest on the capital amount borrowed. The provider recovers the equity from the sale value of the house when it is finally sold. Home reversion plans have reduced in number over the years, and this is mainly because they have reduced in popularity.

The home reversion plan has some advantages, but they also have some distinct disadvantages. Home reversion can offer poor value under certain circumstances. Firstly, the provider buys their share at a discounted price and not at the current market value. Since you have sold the portion to the provider, even if the price appreciation is excellent, you will not benefit on the sold portion of the house. (more...)

Home reversion plans have seen a marked decline in popularity in recent times. This could be due to a variety of factors, not least because newer, more flexible equity release solutions such as interest only lifetime mortgages are now available.

Home reversion plans were much more popular when the only alternative in the equity release sector was roll up lifetime mortgages. . The interest that is charged on the loan in roll up mortgages goes on compounding, and this often leads to the loan amount quickly becoming unmanageable. Although no negative equity guarantees are now in place on all equity release schemes, you can potentially lose all the equity in your home to a huge roll up mortgage debt.

On the other hand, home reversion plans involve selling a portion of the house rather than taking out a loan. There is therefore no interest charged on the equity that you release through a home reversion plan. However, you do lose ownership of the share that you sell to the provider. If you exchange 100% of the property, you technically lose ownership of your entire house. This is in stark contrast to how the interest only lifetime mortgage scheme operates. (more...)

Home reversion is a type of equity release scheme, where you can sell the value of a portion of your property in exchange for cash. The main attraction of equity release schemes is the fact that you can have access to the equity built into your home without having to sell your property and move out. However, like most other financial products, equity release too has its own advantages and disadvantages. Let’s consider the pros and cons of home reversion plans.

Advantages of Home Reversion Plans

The main advantage of home reversion, as opposed to lifetime mortgages, is the fact that because the cash you receive from the provider is not a loan, there is no interest to be paid on it. (more...)

An obvious, albeit difficult way to release the equity in your property is to sell it and move out, and equity release offers a more convenient alternative to this. Home reversion is a type of equity release, but unlike lifetime mortgages, it does not involve taking a loan out against the property.

Home reversion involves transferring ownership of a percentage of the property to the provider in exchange for tax free lump sum cash. Although ownership of the property, either in part or full depending on how much you sell, is transferred to the provider, you retain the right to live rent free in the house until you die or move into permanent care.

Most home reversion providers allow maximum release by selling 100% of the property, but this is an option and not mandatory. There are currently three providers that offer home reversion schemes which are Newlife, Bridgewater,and Hodge Lifetime. Each plan has its own terms and features. All current home reversion schemes are available for applicants over 65 years of age. (more...)

Home reversion plans come with certain caveats which potnetial applicants should be aware of before committing a lifetime to them. In essence, with a home reversion scheme, you sell a percentage value of your property to a home reversion provider in exchange for tax free cash. Because home reversion plans do not involve taking out a loan, but rather selling the property, there are no monthly repayments or interest payments. However, there are expenses to think of when considering home reversion and these include costs of upkeep and maintenance.

When you sell a percentage of your property to a home reversion provider in exchange for cash lump sum, you transfer the ownership of that proportion of the property to the provider. However, you retain the right to live in the house rent free for as long as you live by use of a lifetime tenancy agreement. The house is sold when you die or move into care, and the provider gets their share of the sale value.

As such, if you decide to release maximum value and sell 100% of the property value to the provider, you continue to live at the property but do not have ownership of any percentage of the house. Irrespective of the percentage you sell to the provider, any costs of up keep and maintenance of the house are to be met by you. (more...)

There is a short answer to this question, and a more involved answer. The short answer to this question is yes, it is possible to move to a different house if you have a home reversion plan on your current home. However, the actual feasibility of moving house will depend on the individual case as there are several important factors to consider.

The fact is that moving house if you have an existing home reversion plan on your current property can be quite complicated. Home reversion involves selling a portion of your property in exchange for a cash lump sum which can then be spend as one wishes. This means that part or full ownership of the property is transferred to the home reversion provider.

Transferring this joint ownership from your existing house to the new one can be tricky and may involve a change in percentage of ownership. Whether this percentage remains the same in the new property depends on the plan as well as on the valuation of the new property. Home reversion plans allow for a house move provided the new property meets certain specific criteria. Some plans may also have additional charges to move the plan to a new property. (more...)

Home reversion plans are equity release schemes that essentially allow you to release some or all of the equity tied into your house without the need to sell the house or move out. As such, you can release equity as a lump sum or as regular monthly payments while continuing to live in the house until you die or move into a long term care home.

Home reversion plans involve selling a percentage of the property in exchange for a proportional cash lump sum. You retain the right to live in your house rent free for as long as you live. The plan ends when you die or move into long term permanent care, when the house is sold and the home reversion provider recovers their money from the sale of the house.

Most home reversion plans allow maximum release of equity by selling 100% of the property, but this is by no means mandatory. The amount you get depends on the percentage you sell, the valuation of the property and the age of the applicant. In general, the older the applicant is, the more money they can get, all other things being equal. (more...)

One of the most significant concerns that people have with equity release schemes is that compounding interest on the loan can increase the debt to a point where the sale value of the house is not sufficient to repay the debt. A situation wherein the debt is larger than the value of the home, so that you are required to repay the loan from your own funds or estate is known as negative equity.

Compounding interest on roll up lifetime mortgages often caused the debt to grow disproportionately large over time, so much so that not only did a client lose their estate to the loan provider, but were still left with an outstanding debt. In response to this crisis, the FSA tightened its regulations on the equity release sector. Today, all equity release schemes approved by the Equity Release Council come with a no negative equity guarantee to protect the consumer. The Equity Release Council has a code of conduct for equity release providers, and this contains regulations that the plans must follow in order to be certified or approved by the Equity Release Council.

In case of home reversion plans, there is no question of interest as the equity released is in exchange of selling a portion of the house and not a loan. Since there is no interest to be paid on the lump sum you receive, the debt cannot actually grow larger. However, there is still the possibility of negative equity in home reversion plans - in the unlikely event that the property depreciates so that its value when the plan ends is lower than when it started. (more...)

Historically, an equity release home reversion scheme has been a rigid instrument of finance whereby flexibility was not the key to it's previous success. They work by selling a percentage of your property to the home reversion provider, in exchange for a cash lump sum. Because it is not a loan, home reversion does not involve interest or monthly repayments. Home reversion plans have declined in popularity in recent times. While there were eight home reversion providers in the market in 2007, there are currently only three providers for these schemes – Hodge Lifetime, Newlife Mortgages, and Bridgewater.

All the home reversion plans available allow you to release equity from the house by transferring ownership in full or part to the provider, while retaining the right to live in the home until you die or move into care. While the basic structure or concept behind each of these plans remains constant, each plan also has its own unique features. When compared with the other two plans, the Bridgewater Flexible Release Plan currently seems to be the most flexible home reversion option available.

They have a wide range of release options - allowing you release from 25% to 100% of the property value in exchange for a cash lump sum. The maximum release percentage in Scotland is 99.9%. The minimum applicant age for the Bridgewater flexible release plan is 65 years, and in the case of joint applicants, the youngest applicant’s age must be 65 years or over. (more...)

Home reversion is a type of equity release, but unlike lifetime mortgages which are loans, home reversion plans involve selling a percentage of your house to the plan provider in exchange for a cash lump sum. The demand for home reversion plans seems to have declined in recent times, and this may be due to the potential risks and dangers associated with them. The availability of more flexible and safer equity release schemes has also contributed to this decline.

Let’s look at some of the main concerns related to home reversion plans.

In a home reversion plan, you sell a portion of your house to the provider in exchange for a cash lump sum. However, the home reversion provider typically buys this at a highly discounted price, and not at the current market value of the property. (more...)

Home reversion offers a solution for those who do not want to sell their house and move out, but want to access the value built into their home all the same. It creates a way to transfer ownership of the house in part or full, in exchange for a cash lump sum. This lump sum can then be used by the client in any way they like. Most significantly, it allows you to continue to live in your house rent free for as long as you live.

As opposed to lifetime mortgages, home reversion plans do not involve taking out a loan. Home reversion providers purchase a percentage of your property in exchange for cash. However, this is not a traditional purchase – as the provider cannot take possession of the house nor sell it in order to recover their money. The home reversion provider therefore has to make sure that the tax free lump sum they pay is secured.

The provider wants to ensure at all costs that they will not incur losses when the plan ends. By giving full market value of their share of the property now, the provider will be taking a risk against future market depreciation. In order to secure themselves against such losses, home reversion providers by default offer a highly discounted price for the property. (more...)

An enhanced lifetime mortgage scheme is designed especially for clients who have a shorter than average life expectancy due to a chronic illness or lifestyle choices. A shorter term of loan allows the provider to lend or release a higher than normal or enhanced amount. Although there are no ‘enhanced’ home reversion plans available, and home reversions are not loans, the idea behind enhanced mortgages does apply to home reversion plans, too.

Home reversion offers a way to turn some of the equity built into your home into usable cash, by transferring ownership of a portion of the house to the home reversion provider in exchange for a cash lump sum. You retain the right to live in the house rent free until you die or move into care, when the house is sold and the amount recovered. There are no restrictions on what you can use the cash lump sum towards.

Home reversion is therefore not a loan, but nor is it a traditional sale. It involves some amount of risk taking by the home reversion provider, who is essentially making an investment into your property. Therefore, like a mortgage or a loan, the shorter the time over which the provider can expect a return on their investment, the lower the risk involved. (more...)

There are two types of equity release schemes: home reversion plans and lifetime mortgages. While lifetime mortgages have soared in popularity in recent years, the demand for home reversion plans seems to have steadily declined. While home reversion, like any other financial scheme has some disadvantages, it also has some redeeming qualities.

The main feature of home reversion that repels most people is the fact that you lose part or full ownership of your home. Unlike a lifetime mortgage, a home reversion plan is not a loan, but a payment in exchange of ownership of a percentage of the house. But although you lose ownership on paper you still retain the right to live in the house rent free for the rest of your life, or until you move into long term care. This is achieved legally the home reversion provider providing a lifetime tenancy agreement for the customer.

The lump sum that you receive on home reversion is generally higher than a lifetime mortgage and is a tax free amount, and there are no restrictions on what you can do with this amount. This means that you receive the entire amount released by selling a portion of the house, without any tax cuts. (more...)

We know that when retirement eventually dawns on us, that most will still have some baggage to carry into their golden years. This could be by way of a mortgage or secured loan, which once income drops in retirement, may affect their future affordability. This is just one of the categories of people that equity release schemes may suit. One particular plan is the home reversion scheme which is available to homeowners over the age of 65 years. In case of joint applicants, the younger partner must be over 65 years. Different home reversion providers have different terms, but the minimum value of the property that can be considered for reversion is £75,000.

Home reversion is a way of releasing equity from the house without the need to move out of the property. However, unlike a lifetime mortgage which is a loan, a home reversion involves selling a portion of your house to release proportional equity in the form of a cash lump sum.

Home reversion is therefore suitable for anyone who owns a home, is over 65 years, and wants to access their equity while continuing to live in their home. (more...)

Releasing equity from your home is an important decision, and as such, all care must be taken to understand the implications of any scheme or plan fully before signing up for it. Equity release plans are generally near impossible to undo once you have signed the contract, so it is important not to rush into any decisions simply to repay outstanding debts.

Home reversion allows you to sell a portion of your house in exchange for a tax free cash lump sum. Although you lose sole ownership of the property, you have the right to live there rent free until you die or move into long term care. There are no restrictions on what the money can be used for, and because it is tax free, you receive the entire amount. Home reversion thus allows you to have access to a significant lump sum which is not a loan, and so this amount could effectively be used to pay off outstanding debts.

However, the downside to accessing this equity is the fact that you lose ownership of the percentage of the property that you sell. While the home reversion provider purchases a portion of your house at a highly subsidised rate, in the event that you choose to buy back your share from the provider, you are required to do this at the full market value, which becomes virtually impossible for most people. (more...)

There are many factors to consider when applying for a home reversion plan. In order to understand the best time to apply for home reversion, it is necessary to understand how home reversion plans actually work.

A home reversion plan is an equity release scheme that allows you to tap into the equity or value of your home without the need to liquidate the property. You sell a portion of the house to the home reversion lender whom by way of an equity release calculator result will establish a proportional equity release in the form of a cash lump sum. The home reversion provider buys a proportion of the property from you, and receives this proportion from the sale value of the house.

Thus, a home reversion plan is linked not only to the equity release market, but also the property market. As such, it is important to consider both these markets to find the best time to apply for a home reversion. When you sell a portion of the property to the provider, you lose ownership of that portion. So, if your house appreciates in value over time, you still do not benefit from this increase in value, on the percentage that you have already sold to the provider. (more...)

Home reversion is a form of equity release scheme which allows you to continue living in your house while accessing the equity built into it, in the form of a lump sum.

By undertaking a release of equity from your home is an important decision that has life changing implications, and as such, it is important to consider it carefully before deciding to sign on the dotted line. Let’s take a look at some key factors to consider before choosing a home reversion plan.

Does it Offer Good Value for You? (more...)

Deciding which equity release scheme works best for you, depends on your individual needs and circumstances. There are no fixed rules as to which type of equity release is better than the other, as what works for one person may not work as well for someone else. For instance, protecting the equity in a home for beneficiaries may be more important to someone than having no monthly payments; while having no monthly obligations may be more important to someone else. Having said that, it is possible to generalise about which type of equity release is capable of releasing more cash.

The main reason why home reversion equity release schemes are able to release more than interest only lifetime mortgages is that they are available to applicants over the age of 65 years, while interest only lifetime mortgages are available to applicants over the age of 55 years. As a general rule, when it comes to a loan or a commercial investment, a lender is prepared to offer more for your business the shorter the expected term of the loan or investment is.

That is, the more quickly the lender can recover their investment, the higher they are prepared to invest. In general, applicants aged over 65 years can be said to have a shorter life expectancy than those aged 55 years. This is the principal reason why home reversion plans are, generally speaking, able to release more than interest only lifetime mortgages. (more...)

There are currently three equity release providers offering home reversion plans. They are Hodge Lifetime’s Shared Growth Option , Newlife Mortgages’ Home Reversion Plan and Bridgewater’s Flexible Release Plan. Currently, Bridgewater’s Flexible Release Plan is the most flexible home reversion available.

Bridgewater is a subsidiary of Grainger plc. The company has been operating in the home reversion sector for many years and is a well-known and trusted name in the equity release market. The flexible release plan offers a number of options for clients that allows them to customise the amount they release and time at which they release to suit their individual needs.

The minimum property valuation for the Bridgewater flexible release plan is £75,000. The minimum applicant age for the flexible release plan is 65 years, and in case of joint applicants, the youngest applicant must be a minimum of 65 years old. The minimum amount that can be released is £25,000 or 25% of the property valuation, whichever is lesser. The maximum release amount is 100%. (more...)

Lifetime mortgage plans have become very popular in recent years, when people are looking for flexible and innovative solutions to enable them to maximise their financial assets and plan effectively for retirement. As the demand and use of these products has increased, they have been brought increasingly into the realm of mainstream finance and become more regulated and secure for consumers.

The Equity Release Council is an industry body that spans the entire equity release sector and represents all those who work in this industry, including equity release providers, financial advisers, surveyors and lawyers. What was formerly the Safe Home Income Plans is now the Equity Release Council and the equity release schemes approved by the ERC are mandated to follow the guidelines laid down by the SHIP Standards Board.

The main aim of the equity release council is to make the equity release sector transparent, set standards and guidelines that protect and reassure consumers and increase awareness about equity release products. (more...)

One aspect of equity release schemes that consumers still have some retiscence about is the level of potential early repayment charges. The size of the penalty will be determined by the lender initially selected, the size of the equity release loan and the time period it is redeemed from inception.

The amount paid by the provider is calculated based on the valuation of your property, the percentage sold, and the age of the applicant. Once in place, a home reversion plan lasts until the applicant has died or moved into long term permanent care. At this point the house is sold, and the proportional amount recovered.

Any loan or investment from an equity release provider involves a certain amount of risk on the provider’s part. In case of lifetime mortgages, early repayment of the loan means that providers suffer losses due to the early termination of the loan. A provider can compensate for these losses by charging early repayment penalties to the policyholder. Different lifetime mortgage plans can have different rules with regards to early repayment, but the principle behind early repayment charges remains the same. (more...)

Setting up an equity release plan involves certain costs that must be considered when applying for a plan. Different providers charge different amounts as fees, so the actual amount will vary as per the chosen plan, but following is the list of expenses involved in setting up a home reversion application .

Arrangement Fee to the Provider for the Product: Some home reversion providers charge an arrangement fee at the time that you apply for the plan. Not all home reversion providers charge this, however. For instance, Hodge Lifetime shared growth plan involves no additional application or arrangement fee, as these costs are included in the offer made to you.

Arrangement costs cover the expenses of processing your application and are payable even if the plan should fall through for some reason. (more...)

Bridgewater’s Flexible Release Plan is currently the most flexible home reversion plan available on the market. It is designed to suit a range of customers, and offers attractive features such as high house price inflation protection and early vacancy guarantee that are not offered by its current competitors. The Flexible Release Plan consists of two pathways, the maximum release plan and the secured escalating release plan.

The minimum applicant age for the Flexible Release Plan is 65 years, and in case of joint applicants, the minimum age of the youngest applicant must be 65 years or over. The minimum property valuation to be eligible for the plan is £75,000. The minimum amount that can be released is £25,000 or 25% of the property, whichever is lesser. The maximum you can release depends on the type of plan you choose.

This plan is flexible in two ways: firstly in the way that customers are able to tailor the release to suit their individual needs; and second in that it is available to a wide range of customers. The plan is currently available to home owners above the age of 65 years in England, Wales and mainland Scotland. (more...)

Newlife is one of the three providers of home reversion plans currently available on the market. Newlife’s home reversion plan offers two options – Newlife Optimum Home Reversion Plan and Newlife Options Home Reversion Plan. The plan is designed for people who want to sell a portion of or their entire home in exchange for a cash lump sum, while continuing to live in the house, rent free, for life.

The minimum applicant age for the Newlife Home Reversion Plan is 65 years, and the maximum age is 90 years. In case of joint applicants, the minimum age of the youngest applicant must be 65 years or over. The plan is valid until the last of the applicants has died or moved into long term care, at which point the house is sold.

The Optimum Home Reversion Plan allows a minimum release of £25,000 and a maximum release of £250,000. As with any other home reversion plan, the exact amount that can be released by the applicant depends on the age of the applicant, the valuation of the property and the percentage that is sold. The optimum plan is designed for those who want to release the maximum possible equity, and so 100% of the value of the property is sold in this plan (99.9% in Scotland). (more...)

Home reversion plans UK have unfortunately seen a steady decline in popularity recently. Similar to many businesses who have seen their demise recently due to changing consumer shopping habits, home reversion has seen a similar fate for the same reasons. When the likes of Blockbuster, HMV and Jessops has gone into administration, analysis shows that their business models have unfortunately fallen victim of the times; that is changing consumer demands.

The same can be said with home reversion plans. They were the first types of equity release schemes in the market, however due to inflexibility and lack of innovation & design, they are now snubbed in favour of the lifetime mortgage. This is clearly illustrated by the fact that, while there were eight equity release providers offering home reversion plans in 2007, the number had reduced to only three providers in 2012. Statistical data from 2012 about the types of equity release products used in the UK show that home reversion plans make up only 2% of all the equity release business in the UK. These figures show that the drawdown lifetime mortgage now makes up 62% of the market and conventional lump sum equity release schemes account for 36%.

This goes to prove that the demand for home reversion plans is clearly reducing; even newer and improved version of lifetime mortgages from a growing number of providers are becoming available. The growing number and increasing flexibility of some types of lifetime mortgages is, in fact, one of the reasons for the decline in home reversion plans. (more...)

While a house can be a huge financial asset, it can only practically be a financial asset when it is turned into usable cash. It is common for people to own a home worth many thousands of pounds, but have insufficient cash flow in day-to-day life, or not have enough savings to meet large one off expenses. For homeowners who are strapped for cash but are living in a house worth a significant amount, equity release provides an alternative to selling the property and downsizing.

As people are living for longer, costs associated with old age and retirement are on the rise, and the cost of care is the most significant expense during retirement. With rising costs of living and ever reducing public spending, more and more people are struggling to meet the expenses of long term care.

Home reversion is a way to sell a portion of the value of the property in exchange for a cash lump sum. This lump sum is tax free and there are no restrictions on what you can use it for. Although you can sell a part of or your entire property in exchange for cash, you still retain the right to live in the house, rent free for as long as you live, or until you move into long term care. (more...)