Home Reversion Equity Release Simplified
Leaving current housing market conditions aside, it’s accepted that over a long period of time a house will substantially increase in value. That mortgage that you signed your life away for all those years ago is now paid off and doesn’t seem so sizeable in any case, given the house is worth several multiples of what you bought it for. Home reversion equity release is a way of getting your hands on all or some of that cash that surrounds you, but there are several issues you need to bear in mind before you go ahead.
The home reversion equity release provider will purchase either all or part of a share in your home, but at less than the current market rate, so should you wish to buy it back in the future you will do so at the market rate at the time. The process involves transferring full legal title to the home reversion equity release provider; they will own the house (or share of it), but you will remain living in the property rent free; either until your death or admittance to a long term care home.
Because the lender owns the house; either in entirety or a proportion of it, the value of your estate to your family is either reduced or non-existent when the property is sold on your death or admission to a long term care home.
Means tested and tax based benefits can be affected, so look into that, but the transaction is free from any taxable revenue that you will realise.
If your family has made adequate retirement plans of their own and are comfortable that they will be inheriting either a reduced value of your estate, perhaps none at all, home reversion equity release is one, perhaps the only way, for you to realise a large cash lump sum to make your retirement more comfortable and to be spent on whatever you choose.
Learn more about equity release schemes.
