FAQ: Home Reversion Plans

Under a home reversion plan could I possibly lose my home?

Mon, 22 Mar 2010 11:11:34 GMT

I am considering a home reversion plan but I am concerned that I could possibly lose my home, is this correct?

With a Safe Home Income Plan (SHIP) approved home reversion plan, you always retain the right to live in your property for the rest of your life/lives or until earlier sale because you or the last applicant has moved permanently into a care home. However, by agreeing to enter into a home reversion plan you will be agreeing for the reversion company to buy a percentage of your home's ownership in return for a lump sum usually. The amount of ownership given up in return for the lump sum will be much larger than any money received as the home reversion plan provider will not be charging you rent whilst you live there.

If you only agree to a partial home reversion plan however, the value of any remaining percentage will remain your estates.

For more information on how home reversion plans work see home reversion plans.

With a home reversion plan do I have to pay rent?

Tue, 04 May 2010 12:39:08 GMT

I have seen adverts for home reversion plans, and would like to know if I would need to pay any rent?

No, Safe Home Income Plan (SHIP) approved home reversion plan schemes do not charge you monthly rent, but some may require a very small annual "peppercorn" rent, usually nothing more than about £25 per annum.

What you may be getting confused with is the sell and rent back schemes. Under these schemes you sell your home ownership to the scheme provider and if you want the maximum amount, will have to pay monthly rent all the time you remain living in the property. Unlike home reversion plans, you will only normally receive a shorthold tenancy right, meaning you are only guaranteed the definite right to remain living in your property for an agreed period of time, when the tenancy would then be reviewed and could be terminated.

Under a SHIP approved home reversion plan your right to remain living in your property for the rest of your life, is guaranteed and there would be no monthly rent. To find out more about home reversion plans including their advantages and disadvantages visit home reversion plans.

Do I have to sell all of my home under a home reversion plan?

Tue, 04 May 2010 01:06:44 GMT

I am thinking about taking a home reversion plan. Do I have to sell all of my home at the outset?

Home reversion plans can either be a full home reversion where you agree to sell 100% of your homes ownership at the outset to get the most money possible, or can be a partial home reversion plan where you sell only a percentage of your homes ownership initially, in return for a lump sum. The remaining percentage remains in trust for you to either sell further percentages in the future to raise more money, or to leave for beneficiaries. However, even with a partial home reversion plan you will only leave your estate the value of any remaining share, actual ownership of any remaining share will still normally transfer to the reversion company on your, or last applicants death, or move into care.

The value of any remaining share held in trust for you or your beneficiaries under a partial home reversion plan, will be the value applying at time of death and not the value applying at outset.

For more information about home reversion plans go to home reversion plans.

Home reversion advice.

Should you feel that home reversion plans may be suitable and would like to discuss them in more detail with us, please call us on FREEPHONE 0800 970 4883 or complete our online enquiry form and we will call you back just as soon as possible.

Can I repay a home reversion plan?

Tue, 04 May 2010 01:22:22 GMT

With a home reversion plan can I repay it and regain ownership of any share sold?

This will depend on any contract offered by the home reversion plan company you choose, but even where it may be technically allowed you may find it uneconomic to do, so if you are likely to want to do this, you may be better looking at either a roll up lifetime mortgage or an interest only lifetime mortgage.

The reason you may find it uneconomic under a home reversion plan is that most home reversion plan providers would insist on you repaying the greater of, either the current value of the share sold to them, or the value applying at the outset. As you only received a discounted sum, this would be much greater than the amount of money you received when you sold the share. We would therefore suggest, that unless you won the lottery, paying back any share sold under a home reversion plan would in reality be impossible, even if technically the provider allowed it.

You might like to find out more about how home reversion plans work by looking at home reversion plans and then compare them with lifetime mortgages.

Will a home reversion plan stop me from moving?

Tue, 04 May 2010 01:56:28 GMT

I have heard that if I take out a home reversion plan on my current property this would stop me from moving, is this correct?

No not necessarily. However, if you are thinking of moving in the near future it might be better for you to wait until you have moved before considering a home reversion plan or other form of equity release, because you may find that any money realised by moving could avoid you needing to do a home reversion plan, thus helping you retain more equity in your home for future use of to leave as an inheritance.

Should you not be considering a move in the near future and still want to proceed with a home reversion plan, Safe Home Income Plan (SHIP) approved home reversion plan providers should allow you move, subject to them agreeing that any new property is suitable and acceptable.

Who would pay for any costs incurred would depend on the scheme rules and whether you having previously opted for a full or partial home reversion plan and whether you are moving to a dearer or cheaper property.

Generally on full reversions, as the amount of money given to you was based on the full market value of your current property, you would be expected to pay all moving costs yourself, including a valuation fee on any new property and the reversion company would expect all profits from downsizing.

Under partial home reversion plans you may still be expected to pay all of them yourself, or they may make a contribution towards some of them in the same percentage as they hold ownership in your property, but would also want their share of any profits made on downsizing or would recalculate their share of interest in the new property. You should check this point out before entering into any home reversion plan.

To find out more about how home reversion plans work, visit home reversion plans.