Home Reversion Schemes
This is the more traditional version of an Equity Release Scheme, where the property is sold to a lender or insurer in return for a lump sum, plus a lifetime tenancy of that same property until death or you go into long-term care.
The amount that can be raised through such as scheme is higher than using a Lifetime Mortgage, and is available to those who are 65 and over.
There are a number of features available within a Home Reversion scheme, maximising the amount you can generate in Tax-Free Cash from your home.
One of the main considerations is that the money you take out via a Home Reversion is free of any initial tax. Depending on what you do with this money, there may be some tax payable – for example if you use the cash to invest in the stockmarket, to buy an Annuity, or a deposit account, then any income generated may be taxable.
Higher Amount Released
The Home Reversion schemes typically provide a higher Tax-Free Cash lump Sum than an equivalent Lifetime Mortgage, based on the same age and valuation. Where you have high immediate financial needs, this could help with your planning.
Reduce Estate Value
As your home is sold, the property will no longer be an asset within your financial worth. This could be useful if your estate will attract Inheritance Tax and you have an Equity Release need.
You have the ability to guarantee an inheritance to your family and beneficiaries.
Rent for Life
As the property is sold, the Home Reversion Scheme allows for you to live in the property until you die or go into long term care, with little or no rent to pay.
Should there be an early finish to a Home Reversion Scheme, for example an untimely death a year or two into such a mortgage, many lenders provide a means of protecting the property value and repayment of the original facility. As such, this will ensure the value of the estate will be protected. Please ask for more details.
Home Reversion Mortgages are one of the original Equity Release schemes, used by those 65 or over to take a larger tax-free lump sum than other schemes currently available.
To provide the larger sum, the property has to be sold in full or in part (subject to valuation and requirements) and thus it will have more an effect on the value of the estate on death.
Such schemes are not as flexible as Lifetime Mortgages, but do have some very useful benefits, not only the increased lump sum but also to help reduce future tax liabilities.
Such products are changing and developing on a regular basis, so please ask to review your situation and needs, and we can ensure that you get the right advice about your Equity Release needs.
We will review your overall Equity Release needs as part of our initial meeting. Should Home Reversion be a viable option for your situation, we will refer you to a specialist Financial Adviser.