Home Reversion Schemes Explained
What is a home reversion equity release scheme?
- You sell the whole of your home or a share in it but still live there.
How does it work?
Home reversion company buys the share in your home.
- You will not get market value.
- This is because the equity release company may have to wait 10, 20 or 30 years before they get their money i.e. get their share back of your home.
Do I have to make payments?
- No, there are no interest payments as you have not borrowed money, you have sold equity.
- You will lose the future growth in value of the share of the property that you no longer own
Is my home safe?
- You have a permanent right to live in your home until the day you die or sell your home or move or go into a care home
How much equity can I release?
You usually set the share you wish to sell
- Usually this will be a mininum share that you sell e.g. 50% of the value of property.
- Most people sell 50% or 100% of the property
Who is home reversion suitable for?
- People who have no people to leave their money to on death
- People who like the idea that they have sold a share of the property and retain ownership of a share
Can there be negative equity?
- No, as there is no mortgage, you have sold a share in your home
What sort of interest rates?
- There is no interest charged
Can I release more later?
- If you have only sold a share, you can sell any remaining share either to the home reversion scheme or to others but only if the home reversion will allow it
- You can sell up entirely and bother you and the home reversion will keep your own share of the property value