Home reversion is a form of equity release scheme which allows you to continue living in your house while accessing the equity built into it, in the form of a lump sum.
By undertaking a release of equity from your home is an important decision that has life changing implications, and as such, it is important to consider it carefully before deciding to sign on the dotted line. Let’s take a look at some key factors to consider before choosing a home reversion plan.
Does it Offer Good Value for You?
Everyone has different needs and priorities, and what works for one person may not necessarily work for someone else. It is necessary to understand how a home reversion plan will work in your individual case to understand whether it will work for you.
Home reversion involves selling a portion of the property in exchange for a cash lump sum. The provider purchases a percentage of your property at a discounted price, and once it is sold, you do not stand to benefit from any potential appreciation in the value of the property on the percentage sold.
It is important to think of your health and age carefully when considering home reversion. If you have a shorter than average life expectancy or are in poor health, losing ownership of your home at a subsidised rate may not offer good value. On the other hand, if you expect to live for many more years, home reversion can offer particularly good value.
How Much Money Do You Need to Raise?
Knowing how much money you need can help you determine the most suitable type of equity release option. Different equity release schemes have different terms and even within home reversion schemes, the minimum and maximum amounts of money you can release differ from plan to plan.
How Much Ownership Are You Comfortable Giving Up?
Some people are more uneasy with the notion of losing ownership of their house than others, but most people would prefer to retain as much ownership of their property as possible. By defining how much you are willing to give up, you can go about finding the best possible option within your limits.
Consider also any additional features, guarantees or bells and whistles the home reversion plan may offer. For instance, some home reversion providers offer rebates to beneficiaries in case of early death of the applicant.
While the main attraction of home reversion is having no monthly payments or indeed any repayments as it is not a loan, other types of equity release plans have their own key advantages, too. To find the most suitable option, it is necessary to have a clear idea of your own needs and to seek professional and impartial advice from a financial adviser.
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