What Is a Home Reversion Plan? 

A home reversion plan is a way to release the equity in your home in return for a monthly payment for the rest of your life. You may be able to get a lump sum at the start of the agreement or payments over time. The amount you receive will depend on how much equity you have in your home and how old you are when you take out the plan. A home reversion equity release plan can be a good option if you want to stay in your home but don’t have enough money saved to pay for it outright. Keep reading for more information on how this type of plan works! 

What is a home reversion plan?  

A home reversion plan is a way for you to unlock the equity in your property in return for a monthly income. The amount you receive from the sale of your home will depend on how much equity you have, as well as your age at the time of sale. You may be able to take out a lump sum at the beginning of the agreement or receive payments over time. 

How do home reversion plans work? 

If you decide to take out a home reversion plan, you will sell your property (or a percentage of it) to the provider in return for a lump sum payment or regular income. You will be able to stay in your home for the rest of your life, and the provider will not charge you any rent. When you die or move into long-term care, the property will be sold, and the proceeds will go to the provider. 

What are the benefits of a home reversion plan?  

There are a few key benefits to consider with a home reversion plan: 

1. You will be able to stay in your current home for the rest of your life. 

With a home reversion plan, you will be able to stay on your property until you die or move into long-term care. This can give you the peace of mind of knowing that you have a place to live for the rest of your life. 

2. You will not have to make any monthly repayments. 

With a home reversion plan, you will not have to make any monthly repayments. This can free up some extra cash each month, which can be used for other things such as bills or leisure activities. 

3. You may be able to take out a lump sum at the start of the agreement. 

Some home reversion providers will offer a lump sum payment at the start of the agreement. This can be used for things like home improvements, a holiday, or anything else you might need it for. 

4. You may be able to release equity from your property without downgrading your lifestyle. 

If you need to release equity from your property but don’t want to move to a smaller home, a home reversion plan could be a good option. This is because you will be able to stay in your current property for the rest of your life. 

What are the risks of a home reversion plan?  

There are a few key risks to consider with a home reversion plan: 

1. You may not get the full market value for your property. 

The amount you receive from a home reversion plan will be less than the full market value of your property. This is because you are selling your property (or a percentage of it) at a discounted rate. 

2. You may not be able to release as much equity as you need. 

The amount of equity you can release with a home reversion plan will depend on your age and the value of your property. If you need to release a large amount of equity, you may not be able to do so with this type of plan. 

3. You may have to pay fees if you cancel the plan early. 

If you decide to cancel your home reversion plan before the end of the agreement, you may have to pay fees. This is something to keep in mind if you think you may need to move or downsize in the future. 

4. The value of your property may decrease over time. 

The value of your property may decrease over time, which could reduce the amount of money you receive from the sale of your home when the agreement comes to an end. 

5. You may not be able to pass on your property to your heirs. 

When the agreement comes to an end, the property will be sold, and the proceeds will go to the provider. This means that you may not be able to pass on your property to your heirs. 

Is a home reversion plan right for me? 

A home reversion plan could be a good option if you’re looking to stay in your current property for the rest of your life and you don’t need to release a large amount of equity. However, it’s important to consider the risks before making any decisions. If you’re not sure whether a home reversion plan is right for you, speak to a financial advisor.