A Home Reversion Mortgage is when you sell part or all of your home to a Home Reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.
When considering a home reversion plan, and if it is the right product for you there are a number of things to think about.
Whether or not you can release equity in several payments or in one lump sum. The minimum age at which you can take out a home reversion plan. Some home reversion providers insist you’re at least 60 or 65 before you can apply.
The percentage of the market value you will receive. This will increase the older you are when you take out the plan but might vary from provider to provider.
You have the right to remain in your property for life or until you need to move to long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract. (Equity Release Council standard).
You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan (Equity Release Council standard).
The product has a “no negative equity guarantee”. This means when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more (Equity Release Council standard).
What level of maintenance you’ll be expected to carry out and how often your property will be inspected (this could be every few years.) If you would like to discuss Home Reversion Plans or Equity Release in general please don’t hesitate to call us on 01303 721117 or submit a contact form www.ptmortgagesltd.co.uk