What Is a Home Reversion Plan?
A home reversion plan is a form of equity release that involves selling part or all of your property in exchange for a lump sum or income, while retaining the right to live in your home.
Suitability should always be assessed by a regulated adviser. Senior Wise introduces you to advisers from our partner firms who can provide that assessment.
How Does a Home Reversion Plan Work?
Understanding the process can help you decide if this option is right for you. Here’s a simple breakdown:
Property Valuation
Your home is professionally valued to determine its current market worth.
Percentage Sold
You decide how much of your property to sell—typically between 20% and 100%.
Lump Sum Agreed
The provider offers you a lump sum based on the percentage sold. This is usually lower than the market value to account for your continued occupancy.
Lifetime Lease Granted
You’re granted a lifetime lease, allowing you to live in the property rent-free or for a minimal rent until you pass away or move into care.
Property Sold Later
Once you no longer live in the home, it’s sold, and the provider receives their agreed share of the sale proceeds. Any remaining equity goes to your estate.
How Is a Home Reversion Plan Different from a Lifetime Mortgage?
Both are types of equity release, but they work very differently. Here’s how they compare:
Feature |
Home Reversion Plan |
Lifetime Mortgage |
Ownership |
You sell part or all of your home |
You retain full ownership |
Interest Charges |
No interest charged |
Interest compounds over time |
Inheritance Impact |
Reduced by the share sold |
Reduced by the loan plus interest |
Flexibility |
Less flexible; share is fixed |
More flexible repayment options available |
Repayment Structure |
Provider takes their share when property is sold |
Loan repaid from property sale proceeds |
If you’re concerned about compound interest eating into your estate, a home reversion plan offers certainty. However, you will sell your home below market value, which reduces the amount your family may inherit.
Who Is a Home Reversion Plan Suitable For?
Home reversion plans aren’t for everyone, but they may be a good fit if you:
- Are aged 60 or over (minimum age varies by provider)
- Want certainty about the remaining property share for your family
- Prefer to avoid compound interest on a loan
- Are planning your inheritance carefully and want to know exactly what your estate will receive
- Need access to tax-free cash without monthly repayments
It’s essential to seek regulated advice to determine whether this solution aligns with your financial goals.
Advantages of a Home Reversion Plan
Here’s why some homeowners choose a home reversion plan:
No Monthly Repayments
You won’t have to worry about finding money each month to service a loan.
No Interest Roll-Up
Guaranteed Lifetime Tenancy
You have the legal right to live in your home for the rest of your life, offering peace of mind and security.
Tax-Free Cash
The money you receive is completely tax-free, giving you financial flexibility to use as you wish—whether for home improvements, helping family, or enjoying retirement.
Risks & Things to Consider
Transparency is key when making such an important decision. Here are the potential drawbacks:
You Sell Your Home Below Market Value
Providers typically offer 20%–60% of your property’s market value, depending on your age and the percentage sold.
Reduced Inheritance
Property Value Growth Goes to the Provider
If your property increases in value, the provider benefits from the growth on the share they own—not you.
May Affect Means-Tested Benefits
Receiving a lump sum could impact your eligibility for certain benefits like Pension Credit or Council Tax Support.
Early Exit Can Be Complex
If you want to move or change your mind, exiting the plan early can be complicated and may involve fees or restrictions.
It’s vital to weigh these considerations carefully and discuss them with a regulated advisor.
How Much Can You Release with a Home Reversion Plan?
The amount you can release depends on several factors:
- Your age: Older applicants typically receive a higher percentage of their property’s value.
- Property value: Higher-value homes may offer more cash, but the percentage offered still applies.
- Percentage sold: The more of your home you sell, the larger the lump sum.
- Provider criteria: Each provider has different terms and eligibility requirements.
We cannot provide exact figures, as every situation is unique. However, a regulated advisor can give you a personalised illustration based on your circumstances.
How Our Home Reversion Introduction Service Works
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Senior Wise does not provide advice or recommendations on equity release products.
Is a Home Reversion Plan Regulated?
Yes. Home reversion plans are regulated by the Financial Conduct Authority (FCA), which means:
- You must receive regulated advice before proceeding.
- Providers must meet strict standards to protect consumers.
- Most providers are members of the Equity Release Council, which offers additional safeguards, including a no-negative-equity guarantee.
This regulation ensures that your interests are protected throughout the process.
Frequently Asked Questions About Home Reversion Plans
Do I still own my home?
Can I move house later?
Yes, most plans are portable, meaning you can move to another property. However, the new property must meet the provider’s criteria, and you’ll need to seek advice before moving.
What happens if I die?
Can I sell 100% of my property?
Will my family inherit anything?
Can I change my mind after signing?
You have a 14-day cooling-off period after signing the contract, during which you can cancel without penalty.
Speak to a Home Reversion Specialist Today
Considering a home reversion plan? Get expert, FCA-regulated advice tailored to your unique circumstances.
Our trusted advisors will help you understand your options, assess suitability, and ensure you make the right decision for your future.
Important Information
Senior Wise acts as an introducer only. We do not provide financial advice. Equity release may reduce your inheritance and affect means-tested benefits. Regulated advice from a qualified adviser is essential before proceeding.