home reversions scotland

Home Reversion Plans

A Home reversion plan is another financial product that is available to homeowners looking to gain access to the money tied up in their properties. There are a number of key differences between a draw-down mortgage and a home reversion plan, so it is important that you fully understand the options available to you.

With a home reversion plan, you agree to sell all or part of your property to the reversion company, for an agreed lump sum of money. Once the agreement has been signed the ownership of the property transfers to the reversion company. The seller does not receive full market value, but one of the huge benefits of this option is that the seller is granted a lifetime lease, which enables them to live in the property rent free until their death. Upon the death of the homeowner, the property is then sold, the debt repaid and if there is any surplus that is then added to the estate.

Home Reversion Plans - Key Factors

Age Restriction – Unlike some of the alternative options, to qualify for a home reversion plan, the homeowner must be aged 65 or over.
Peace Of Mind For Inheritance Purposes – When signing up to a home reversion plan, there is a lot more clarity regarding the inheritance you can leave. You choose a percentage of the property to sell, knowing exactly how much ownership of the property you will retain to leave as an inheritance.

You Retain The Benefits Of Home Ownership – One of the key benefits of owning your property, other than providing a home and sense of security is that you benefit from any increases in property values. For many people considering a home reversion plan, they will already have enjoyed stellar growth over the last few decades, and the home reversion plan provides an opportunity to continue to benefit from those price increases. As you still own a percentage of the property, any increases will be reflected in the final selling price, for the percentage of the property for which you retain ownership.

Interest Rate Variations Will No Longer Be A Consideration – Upon retirement, a change in interest rates can create uncertainty and financial stress. Once a home reversion plan is in agreement, unless the homeowner chooses to sell a further percentage of their property, the fluctuation of interest rates is no longer a concern. At Equity Release Scotland, many of our clients tell us that this is one of the key benefits as it provides them with piece of mind.

There Are No Restrictions On How The Money Raised, Is Spent – Once the agreement is in place, and the money has been deposited the seller is free to spend that money on anything they want. A round the world trip, a new car or paying university fees, the choice is entirely yours.

Things To Take Into Consideration When Choosing A Reversion Plan

Once the agreement is signed, you will no longer own 100 percent of your property, but this may be outweighed by the fact that you no longer have any mortgage repayments to make.

You will not benefit from the full increase in the value of the property, although you will still receive the full value of the increase in the percentage of the property you retain.

You will not receive market value for the property, although in return you benefit from rent free accommodation

Unlike some of the other alternatives, such as a lifetime mortgage, a reversion plan can be much more challenging to reverse, should you change your mind at a later date. This is because you have sold part of the property, so you are then dependent on the reversion company agreeing to sell that proportion back.

Selling part of your property will inevitably reduce the value or your estate, and might also affect any entitlement to state benefits. It does, however, release the equity in your home, and allow you to enjoy a more pleasant retirement, doing some of the things you always dreamed about.

There is a small element of risk to the deal if you were to pass away relatively quickly after signing the agreement. This is because you are selling the property below market value, but there are certain products which provide protection for the seller in these circumstances. Our friendly team of advisors at Equity Release Scotland can advise you on all of the options available to you.

At Equity Release Scotland, we offer a broad range of financial products all of which will achieve the goal of releasing some of the equity in your home. Although this website can provide a lot of the basic and generic information, everyone’s situation is different, which is why it is important to sit down and discuss the available options with one of our trained experts.

Give us a call today on 0131 644 3664 or 0333 360 1958 and we can arrange a no obligation discussion about your situation, and present you with all of the available options. Once you decide on the best alternative for you, we will walk you through the process, ensuring that you have a sound understanding of everything before we proceed.

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Frequently Ask Questions

Once the money has been released to you, the choice on what to spend it on is entirely up to you. There are no restrictions whatsoever (provided it is legal!). So whether you want to go on a round the world trip, buy a new car, or simply pay off other debts, the choice is entirely yours.

Absolutely, that is one of the major benefits of this type of scheme, and it in our opinion is one of the more important foundations upon with the agreement is built. There is little point in removing the financial stress, if a few years down the road you are concerned about losing your home. In fact, not only are you entitled to remain in the home for the rest of your life, but so is anyone else mentioned in the agreement.

If everything goes according to plan, then it is entirely feasible for the money to be released to you between three and four weeks. However, always err on the side of caution and plan on the entire process taking up to eight weeks. The length of time is not entirely under our control, and can take even longer if your solicitor is unfamiliar with equity release schemes for instance.

When you sign the contract, you are simply agreeing to another style of mortgage, so the ownership of the property remains with you.

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