How does it work?

With this plan, you sell part of or your entire home to a reversion plan company in exchange for a tax-free cash lump sum and a guaranteed lifetime lease with no monthly repayments to meet.

You can stay in your home either rent free or by paying a nominal rent for as long as you choose and you can guarantee an inheritance to your beneficiaries. Both you and the reversion scheme company share in any increase in your property’s value, providing you have not exchanged 100% of its value.

Advantages

1. No monthly repayments to make.
2. You know what proportion of your home will be used at the outset.
3. You can leave a fixed proportion of equity to your estate.
4. Flexible home reversions now allow you to release the right amount for your needs today, whilst having a guarantee of further cash releases if or when required in the future.
5. You benefit from any increase in value of the percentage of the property that you still own.
6. May be available to those aged 55+ and you can typically raise more money from your home at a younger age with a reversion plan than a lifetime mortgage would allow.
7. You’ll be able to release more money the older you are.
8. You can usually still move home (subject to certain restrictions).

Disadvantages

1. You do not typically receive the full market value of the share of the property you sell. This is due to the fact that the reversion plan company gives you the absolute right to live in it rent-free for the rest of your life. They, however, do not make their return on investment for a number of years.
2. You only benefit from any rises in house prices on the proportion you still own.
3. The reversion plan company will benefit from any increase in the value of the property.
4. Reversion plans cannot usually be reversed as you are selling part of your home.
5. Reversion plan providers do not usually guarantee further advances.
6. If you choose to end the plan early, charges may apply.
7. Your tax position and eligibility for means-tested benefits may be affected.

At Blestium Financial Services, we can refer you to Equity Release experts who can help get you the right deal; get in touch to find out more.

A Lifetime Mortgage is not suitable for everyone and may affect your entitlement to means tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.

The interest that may be accrued over the long term with a Lifetime Mortgage, may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.

Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a Lifetime Mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your Financial Adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead. This is a referral service.