Equity Release News

Equity Release Home Reversion is Advantageous

Home reversion Plan

A home reversion system is based on the following principle: you sell your estate or a percentage of it to a lender that will assess your situation and offer you a lump sum of tax-free money in exchange for part or all of your property. In exchange you get the right to live in your home free of charge, rent-free for the rest of your life, as well as having cash in-hand now during financial hardship. Equity release home reversion schemes are not for everyone. Carefully weigh-up the options you have and choose the one most advantageous to your situation.

An equity release home reversion is different from an Interest Only Lifetime Mortgage. One of the few mistakes that people make when informing about this particular scheme is believing that an individual has to sell the whole 100% of their house in order to be eligible for a home reversion scheme. This is not true, seeing that most loan providers offer products that range from an exchange of 25 to 100% of the property to become eligible. It is therefore a matter of personal choice. You have to, however, take into consideration that the minimum sum that can be discharged is £25,000, depending on the product.

Currently there are two major types of plans on the market: the Bridgewater flexible release plan and the Hodge Lifetime shared growth option. The first option allows clients to choose the amount of their house they want to sell, according to the numbers presented up above. The second plan provides some different options, however, allowing clients to sell a percentage of their estate beginning with 30%, as long as their property is estimated to be at least £100,000. These two schemes are currently available in England, Scotland and Wales.

There are various opinions about this arrangement, particularly in online media. Therefore, the people that are interested in purchasing a product such as the one presented up above are advised to take the matters into their hands and do a complete documentation work.

A common misconception is, for example, the idea that you could get less money for your property by using this set-up, instead of selling it on the normal market. The house is assessed by a team of independent experts, so your evaluation is correct and thorough. A very useful way of documenting this method is the home reversion calculator, but be aware that it is becoming rarer to find one of these calculators on providers’ websites nowadays.

Equity release home reversion does a fair assessment of market value; however, the provider has to consider how long you may live in the home, since you will have a lifetime tenancy. While you will not be paid full market value, you will receive a fair percentage based on your age and life expectancy. This is the same for interest-only lifetime mortgages, too.

The main concept is to ensure that you get a fair price for the amount of home sold to ensure you can pay your bills, debts, or make home improvements. You can benefit from home improvements in the remaining portion of your home since the value will be increased.

If you decide to sell any of the remaining part the house value is reassessed to ensure you get a fair value. The money will again be tax-free and any remaining part is still available to your beneficiaries. At the time of the house sale to another party due to death or removal to a care facility, the market value is assessed again. The remaining value in the home is given to your relatives.

An interest-only lifetime mortgage is still a loan meaning it is a debt that remains after death or until you sell your home. You pay interest on that debt, but the principle remains. You can determine the amount of equity you take in this type of mortgage like getting a loan for only 30% of the home equity. The remaining equity is then given to your beneficiary when the house is sold.

The difference is any principle or interest still outstanding at the time of the sale has to be paid to the loan provider before your beneficiaries receive their inheritance. The home reversion system is here to stay so do not hesitate to contact the available providers that promote these products. Equity release home reversion has its advantages, which is why it will remain as a product available to you for years to come. It has just been misrepresented in online media distracting from the real benefits behind such schemes.