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Home reversion plans

A home reversion plan is where you sell part or all of your property to a provider, and you get a tax-free lump sum in return.

What is a home reversion plan?

Home reversion plans are very different to lifetime mortgages. With a home reversion plan you sell part or all of your home to the home reversion company at less that its market value. In exchange you will receive a tax-free lump sum and although you will no longer own your own home you have the right to live there rent free.

 

How does a home reversion plan work?

To qualify for a home reversion plan, you need to be aged 65 or over. With this type of plan, you’ll receive a pre-determined amount of money in return for selling all or a percentage of your property to the home reversion company.
 
When the plan comes to an end, when you or the last remaining applicant has died or gone into long-term care, the house is sold and the provider takes their percentage of the proceeds. The remainder will be left to your estate, if you did not sell 100% of your property.
 

No interest or monthly repayments

With a home reversion plan there are no monthly repayments and no interest is charged. You will receive less than the market value for your property, but you will have the right to continue living there rent free.
 
The amount of money you will receive with a home reversion plan depends on your age, the value of the property and the percentage that you sell.
 
 

Is home reversion right for you?

Home reversion is one type of equity release plan, but there are other options that may be more suitable depending on your circumstances.

 

Things to consider

  • With a home reversion plan, a percentage or all of your home is sold to the home reversion company for less than true market value.
  • You will no longer own your home, but have the right to live there rent free.
  • Your beneficiaries will not benefit from any house price growth on the share sold to the reversion company.
  • Once you have taken out a home reversion plan, it can be difficult to cancel, as you have sold part of your property. It can be repaid, but the property would need to be bought back from the reversion company at the full market value.
  • Mortgage Advice Bureau do not offer home reversion plans.
  • Mortgage Advice Bureau offer lifetime mortgages only, which is a loan secured against your home.
  • Unless you decide to go ahead, our service is completely free of charge as our usual advice fee of 1.5% of the amount released would only be payable on completion of a plan, subject to a minimum advice fee of £695.
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.