home reversion plan calculator

Home reversion calculator

What is home reversion?

Home reversion is one of several forms of equity release. It is different from other forms of equity release such as lifetime mortgages.

With a lifetime mortgage, you continue to be the owner of your home. With a home reversion scheme, you instead sell your home – or a share in your home.

You will be given payment which is less than the market value of the property. Selling your home for less than it is worth could seem like a bad deal, but it comes with a valuable guarantee.

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For the rest of your life, you will maintain the right to be a tenant in the home, rent-free. This allows you to receive income which you might need during your retirement.

The payment you receive can take different forms. You could receive either a cash lump sum, or a monthly payment.

You do not have to give up the entire value of your property. Instead, you can sell a percentage, which will make you a co-owner of your home rather than the sole homeowner.

The exact figures are based on your age. The older you are, the more of the value of your property you will likely be able to keep.

This form of equity release is often seen as being best for those aged over 70. For this reason, it is less popular than lifetime mortgages.

The calculators provided by various home reversion companies and advisers can help you to work out whether their products are right for you.

Here is a short video explaining how home reversion schemes work.

What is an equity release home reversion calculator?

An equity release home reversion plan calculator gives you an idea of how much money you can get with home reversion. Typically, equity release may range between 20%-60% of the value of your property.

You might have the option to see what the money would look like both as a lump sum and as a monthly payment. To use an equity release calculator, you will need to have an idea of your property value.

Even if this is only estimated, it will help you to compare the different types of deal and work out whether you would prefer to have a lump sum or a regular payment.

Many of these tools are provided by home reversion providers. Seeing a personalised illustration can help you understand the features and decide whether this type of scheme can work for you.

release calculator

You might have the option to see what the money would look like both as a lump sum and as a monthly payment. To use an equity release calculator, you will need to have an idea of your property value.

Even if this is only estimated, it will help you to compare the different types of deal and work out whether you would prefer to have a lump sum or a regular payment.

Many of these tools are provided by home reversion providers. Seeing a personalised illustration can help you understand the features and decide whether this type of scheme can work for you.

How much interest do you pay back on equity release?

It is important to understand that with a home reversion plan, you do not borrow the money. It is not a loan, like a lifetime mortgage.

The money that you take out using equity release will be tax-free. However, you will find that if you profit after reinvesting the money, taxes may be involved.

What costs might be involved if I take out a home reversion plan?

Equity release schemes can sometimes bring extra costs. This can include legal fees.

You may have to have buildings insurance. The equity release reversion provider will also expect the property to be maintained, so you will need to budget for maintenance.

If you are liable for ground rent on your home, you will still be responsible for this.

What are the risks of a home reversion plan?

Home reversion schemes are often not as flexible as lifetime mortgages. This means that if circumstances change, you could run into difficulties – for example, if you want to move house.

With a home reversion plan, you will definitely not be able to leave your property to your loved ones. However, they may still get some inheritance from your home, if you have not taken out all of its equity through the equity release scheme.

If you are on a fixed income plan, your payments may not amount to much if you live only a short time. Some companies have plans available which protect against this risk.

You may end up selling your home, or a share in it, for less than it is worth. Companies do not know when they will be able to put the property on the market, and so they have to account for potential dips in sale price.

Are home reversion plans regulated?

Your home reversion provider should be authorised and regulated by the financial conduct authority. It is important to check the details of your plan. Automated tools and calculators can only go so far. To get further information, it is best to talk to someone at the company directly – don’t be afraid to ask questions. You should also take independent financial advice. Look for specialised equity release advice services.

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Other articles related to Home Reversion Plans you will find useful

What is a Home Reversion Plan?

A home reversion plan is a form of equity release scheme. Equity release schemes are a way of releasing some of the value of your property in exchange for cash. Lifetime mortgages are another type of equity release scheme.

Home Reversion Calculator

An equity release home reversion plan calculator gives you an idea of how much money you can get with home reversion. Typically, equity release may range between 20%-60% of the value of your property.

Home Reversion Companies

A mixture of companies such as insurance providers and retirement providers offer home reversion in the UK. There are far more lifetime mortgage providers than home reversion providers. 

Equity Release Calculator

An equity release calculator allows you to effectively ‘try before you buy’ and plan ahead. It’s a great way to see how much capital you can (and should) release from your home. This articles explains how they work.

How Does Equity Release Work?

Equity release generally involves stumping up the entirety or a portion of the value of your property in return for cash. The cash can be spent however you wish. This article looks at how it works in more detail.

Pros & Cons of Equity Release

Equity release schemes do have many benefits – but they aren’t suitable for everyone. Each individual provider and type of scheme will also have individual positives and drawbacks.  This article looks at what you need to look out for.

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