Home reversion schemes

Mortgage advice

Home reversion in detail


With a home reversion scheme, a share of your house is exchanged with a reversion company for a monthly income or a lump sum of cash. While you still own a share of your house (or none at all if you decide to sell 100% of it) you will technically become a tenant with the right to continue living in your home for the rest of your life or until you decide to leave the property. This is typically rent free though a nominal charge is sometimes involved.

If you sell your property, often the home reversion plan is transferable as long as the new property represents adequate security. If you have a partner, the right you have to live rent free in the property will exist until the surviving partner vacates the property.
If for whatever reason you decide to sell your house, you are naturally still entitled to a share of the proceeds. What share of the proceeds you are entitled to is dictated by what proportion of the value you released in the initial home reversion agreement, for example if you released 60% of the value of your house then you would be entitled to 40% of the sale value.

In comparison to other products, a Home reversion plan usually yields more than a typical Lifetime Mortgage. Conversely the amount generated wouldn't be as much if you sold your house on the open market and moved out. This is because no rent is ever paid (or in some cases a nominal value). The typical value of the rent paid is usually £10 - £20 pounds a year and is fixed for the time you are in the property. The reason the Home reversion amount generated isn't the same as an open market sale is that an amount is deducted which represents a payment of rent for the number of years it is estimated you'll be living there.

The Home reversion schemes we have are available for applicants aged 65 or over (for couples the younger application must be aged 65 or over). The Home reversion plan's payout amount is dependent on your whether you are male or female, the value of your property and your age(s).

Advantages of home reversion schemes:

  • A tax free lump sum is yours to use in any way.
  • Current income is not taken into account
  • Typically no rental payments
  • Home reversion give's the greatest yield compared to other equity release plans.
  • This plan is flexible enough to allow you to move home if adequate security is provided in the new home.
  • Likelihood of Inheritance Tax liability is reduced as you're reducing the value of the estate you are likely to leave behind.
  • You can release a portion of your equity, leaving the rest for future or your inheritance plans.

What are the advantages of home reversion plans?

  • On your death it allows you to leave to your beneficiaries the value of any part of your property that you’ve not sold.
  • If you only sell part of the equity, you (or your estate) will benefit from any increase in your property’s value, proportionate to the share of the property you continue to own


Disadvantages of home reversion plans

  • As the plan doesn't value your property at market levels due to factored in rental costs, this leaves you with a reduced inheritance value.
  • If release all your equity, you will not benefit from any rises in the housing market.
  • The less elderly you are, the less the plan pays out.
  • Your property can no longer be used as security for a loan of any kind
  • If you were to leave the property soon after taking out the plan, or were to die there would be a disproportionate loss to your inheritance's value.


Please contact us to discuss your equity release options or call 020 8302 5533 today.

The following statement applies to this type of mortgage:
This is a home reversion scheme. To understand the risks and features, ask for a personalised illustration