Home reversion plans
With a home reversion plan, you agree to sell a percentage of your property (up to 100%) for an agreed amount. You can receive this as a lump sum, an income or both.
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Full reversion example
Your home is worth £100,000. You agree to sell all your property to the reversion company for half its current value, so you receive £50,000. When you die your house is worth £150,000, 100% of the house is owned by the reversion company, so there is no residual value to pass on to your beneficiaries.
Partial reversion example
Your home is worth £232,000. You agree to sell 50% your property to the reversion company for 25% its current value, so you receive £58,000. When you die, your house is worth £300,000.The reversion company will receive £150,000 in recompense for their original loan of £58,000, your estate will have £150,000 to pass on to your beneficiaries.
Advantages of home reversion plans
- You continue to live in your home
- No monthly interest repayments
- You control what portion of the property is left to your beneficiaries – If you sell 50% of your property, then 50% is still available to be left to your beneficiaries
- Plan provides a tax-free cash lump sum and/or partial payments
- The payment is larger if the applicant suffers impaired health
Disadvantages of home reversion plans
- Full Reversion – You do not own your house
- Partial Reversion – You only own a percentage of your house
- You may not be able to move or downsize as you do not own all or any of your house. Reversion policies are not portable, so the house will have to be sold and the reversion company repaid before you can move to a new home
- Full Reversion – You will not own your home when you die, so you cannot leave it or any money from it to your family or other beneficiaries
- Partial Reversion – You will not own 100% of your home when you die, your family or other beneficiaries will not inherit the full value of the house
- The home is bought at a discount so is less suitable for people in their 60s
- If death occurs soon after taking out a plan, it could be poor value for money
- Reversion companies may not buy ‘unusual properties’ and/or in certain locations
- General upkeep expenses – you are responsible for the upkeep and maintenance of your property. If it is not done to a satisfactory standard, the reversion company may do it and invoice you
Financial advice disclaimer
Agincare is not authorised to provide investment or other financial advice and nothing on this page should be construed as such. We recommend you obtain independent financial advice from an adviser registered with the Financial Services Authority.
