A home reversion plan is where you sell part or the whole 100% of your property to home reversion providers. In return you receive a tax free lump sum or a monthly income, whilst you are able to stay in your home rent free. Home reversion plans are offered to those who are 65 and over. The home reversion provider recoups their money when the property is sold. This only happens once you have died or move into a long term care centre.
Some examples of home reversion providers are Bridgewater, Newlife Mortgages and Hodge. As these types of companies are in competition they usually offer competitive rates or perks for choosing their products. A customer usually finds that they have loyalty to certain companies as they believe that they are the best provider due to commercials.
This actually might not be true. The plans that providers supply can differ so a customer should actually find the plan that suits their needs. Just because they think a company is the best provider does not mean they will be getting what they need from an Equity Release scheme.
Some companies will require you to sell a certain percentage of your property, others offer better rates based on the property value, and some will only give you a lump sum if you sell all of the property. There are lots of different plans and all have a set of terms that must be followed.
Instead of just picking the provider that you think is best, shop around. You can get quotes from different home reversion companies online with no obligation to proceed with them. This means you are then able to compare the plans of each company and what they are offering. You can also get in touch with a sound independent financial adviser. They will do the research based on your needs finding the provider with the best plan that suits you.
Your home reversion plan is not based on the provider and the provider can actually become irrelevant when choosing a plan. Your home reversion scheme is then based on the plan itself, not from where you obtain it. This is because it has to be suited to you and your needs. As a customer that is what comes first rather than obligation to any of the home reversion providers available to you.
Before you start your search for a provider, it can benefit you to understand some of the main benefits of home reversion versus lifetime mortgages. You have both options available to you. Looking at only one choice in your retired life can be limiting. You may learn after the choice in home reversion plan is made that there was something entirely different and better, unless you continue reading.
Lifetime mortgages are loans where you do not make a monthly payment, but instead obtain a lump sum of money or monthly instalments to help you pay your expenses. You do not sell your home. The main difference is that you have an outstanding debt on the property that has to be paid by your beneficiaries. In most cases this means the home is sold because your beneficiary is unable to pay the loan off after you die or move into a long term care centre.
It is the main difference of selling your property or having a loan on it that usually decides a person’s mind regarding home reversion versus lifetime mortgages. Yet, there are other considerations like your age and life expectancy. A younger person, age 55 and older, can obtain a lifetime mortgage. However, life expectancy is usually more, which can cause a lower lump sum or monthly payment to be paid out.
You do have choices with lifetime mortgages in whether you draw a monthly payment or get a lump sum. You also have the option of obtaining a mortgage based on your health, where an illness can pay out more and in a lump sum due to a lower life expectancy.
As you search around for home reversion providers remember the differences discussed above in order to determine which type of plan would be the best. If you do not like leaving debt behind for your family, the clear choice is home reversion. You also guarantee a small inheritance based on the amount of property you did not sell, which often satisfies the worry of your family or beneficiaries being left without anything. Agents registered with SHIP from the above named companies are the best to seek out if you have questions.