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.
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.
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.
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
There is some other information to consider when looking at Reversion Mortgages
The amount you can borrow compared to other schemes (such as Lifetime Mortgages) is higher, so it is suited to those that need additional funds, however there will not be as much, or anything left, for Inheritance purposes. There is a trade-off to consider with this.
Any Lump Sum taken may affect your qualification for benefits, especially those that are means-tested. If the lump sum is then used to purchase an annuity to improve retirement income, that annuity income will also be taxed. As always we recommend you get advice from a suitable accountant or from HMRC if you require help with any taxation.
Aside to the Early Breakage option, as the property has been sold at the outset, it will be difficult to repay any facility in the future.
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.
Essex Home Finance are Mortgage Brokers with access to a significant number of Mortgage Providers and Equity Release Lenders.
Free initial Appointment
One Low Fee payable on Offer
Exclusive Mortgage Schemes
Essex Home Finance Ltd is an Appointed Representative of Mortgage Intelligence Ltd which is authorised and regulated by the Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.
Registered address: 1 High Street, Chelmsford, Essex, CM1 1BE. Registered in England & Wales under number 10607263.
Your home may be repossessed if you do not keep up repayments on your mortgage
There will be a fee for all Equity Release Mortgage cases. Typically our fee will be £695, payable on Offer. We will agree any fees with you before we proceed with your case.
We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independent Ombudsman.
Our advice is covered under the Financial Ombudsman Service. You may be able to submit a claim through the EU Online Dispute Resolution Platform If you live outside the United Kingdom or if you prefer not to deal directly with the Financial Ombudsman Service.
Essex Home Finance Ltd
1 High Street
Email : email@example.com
Tel : 01245 398466
Mob : 07795 081972