A Guide To Home Reversion Plan Equity Release Schemes

By Author: Edward Bradley
Total Articles: 2
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A home reversion plan is a type of equity release. An equity release product such as this allows you to withdraw equity that is tied up in property. You receive this money in the form of a loan against the value of your property, which is then repaid alongside and interested that is accrued when your property is sold by your provider upon your death or when you move out of your own home and into a care home.

While signing up for an equity release plan means that you do not have to make any loan repayments while you are still living at your property, this also means that you are prevented from being able to leave your property or the proceeds from the sale of your property as an inheritance to you family, due to the fact that the rights to your property will be signed over to your lender.

However, home reversion plans are a kind of equity release that gives you the chance to retain a percentage share of your home so that you are still able to retain an inheritance to hand on to your family members or friends.

So what happens when you take out a home reversion plan? Well, you sell a portion of your property ...
... to a reversion provider in return for a lump sum, a regular monthly income, or a combination of the two. Basically this will make you a tenant in your own home albeit with a lifetime lease, which means that you will be legally entitled to live there until your death, without having to pay any rent.

When your home is eventually sold on, the moneys from the sale will be divided between your provider and your estate. It is up to you to choose at the outset how much of a percentage of the value of your home you wish to leave to your family as an inheritance.

The major benefits of this type of scheme are that you have no loan repayments to worry about while living in your property, the loan you acquire is tax free, you are free to spend your loan money any way you want, and finally, you receive the promise that a guaranteed percentage of your home will be handed down to your family.

The major downsides to home reversion plans are that your release provider will always buy your property at less than its full market value, and that if you die shortly after having taken out the agreement, this basically means that you will have sold your property at a significant loss. That being said, there are home reversion plans that that will guarantee to give your beneficiaries a rebate in the event that you should pass away within the first few years of the plan.

Thomas Wilson is a financial adviser and finance writer. If you are considering releasing equity from your home, they recommend seeking further advice from equity release mortgage specialist Bower Equity who offer impartial advice regarding all matters of mortgage equity release. More details go to http://www.brsequity.co.uk