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Home reversion plans and how they work

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Oct 24, 2022

Home reversion plans – How do these types of equity release work?

Home Reversion Plans used to be the only equity transfer option available for those who wanted to cash in on their property wealth. They are no longer as popular, but some providers still offer them.

We offer independent financial advice and will show you how home reversion schemes work, why it isn’t as popular and your other options.

We have experts in home reversion plans; click the button below to start your home reversion plan journey online.

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What is a home-reversion plan?

These equity release schemes allow you to sell your home and continue living there. A specialist equity release provider can offer to sell the entire property (i.e. A full reversion of all or a portion of the property (i.e. A part reversion is for a cash lump sum, regular payments or a combination of both.

A lifetime mortgage lease will be granted, which allows you to stay in the house until your death or when you move out. Although this will usually be rent-free (some plans require you to pay monthly rent), others may have monthly payments.

The amount you will receive is typically between 30% and 60% of the value of your home. Your offer will be higher if you are older and you might be eligible for a better offer if you have life-limiting conditions.

Experts and an equity release adviser aren’t recommending home reversion plans. Experts and financial advisers don’t recommend home reversion plans. This is because other options allow you to stay in your home until death while gaining access to your property wealth.

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Criteria for eligibility on home reversion plans

The following criteria are typically used to determine eligibility for home reversion:

  • The minimum age for a home-reversion plan is 60
  • Your home must have a minimum of £80,000 or more, depending on the provider
  • It must be in a good enough condition to allow the provider to sell it later.
  • Your provider may ask for 80 years of leasehold if your property is.
  • You must not have any mortgages or other loans attached to the property. If you do, you might be required to repay them with the cash you get.

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Home reversion has its benefits and drawbacks.

The main advantages of a home reversion plan include:

  • You can stay in your home.
  • You don’t have to pay tax on the money you get. This is called a tax-free lump sum.
  • You can protect the portion of your home you have sold if it is only a part.

You should be aware of the following disadvantages of a home reversion plan:

  • You can still live in your home, but you won’t be able to own it or be a part of it.
  • You will therefore reduce the estate’s value that can be passed on to loved ones.
  • The market value of your property will not be affected by the cash you receive.
  • If you change your mind, your home must be purchased at market value. This can be very costly.
  • If you want to allow anyone else to live on the property after they have it, you will need permission from the home-reversion provider.
  • The cost of maintaining the property will remain your responsibility.
  • You may bear other costs such as ground rent or service charges.
  • Additional costs include an arrangement fee, valuation fees, and legal fees.
  • A cash lump sum may affect any benefits you are entitled to, such as pension credit.


There are many other ways to increase cash to pay for your retirement living expenses.

Mortgages for life

Both lifetime mortgages and home reversion plans can be used to access your property wealth without you having to move out of your house. One crucial difference makes lifetime mortgages more popular:

Home reversion plans will require you to sell your house, but lifetime mortgages let you keep it your home for the rest of your life. A loan is available to you that you can repay after your death or when you move into long-term care.

Use this online equity release calculator to estimate how much you can borrow for a lifetime mortgage, or click the link below.

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Interest-only mortgages for retirement

You might not be able to get a traditional residential mortgage if you are retired. However, a retirement-interest-only (RIO) mortgage may still be possible. These mortgages are for older borrowers and are easier to get approved for.

It’s an interest-only mortgage, so you will only have to repay the interest, not the capital. You can prove your ability to pay them by making lower repayments.

When your property is sold, the loan’s capital must be repaid (usually after you have died or moved into long-term care).

Other options

Your financial situation will determine which options you have, but they could include:

  • Remortgaging – If you have a mortgage currently, you might be eligible to borrow more. You can do this with your current or another lender (subject to affordability assessment).
  • You can downsize by selling your house and moving into a smaller one. This will give you more cash.
  • Renting your property to tenants: While moving out, you could rent a smaller property and let the tenants live in your home. This would allow you to keep the house while still using it to pay your living expenses.
  • A personal or secured loan is an option if you have short-term cash flow issues.
  • Selling assets: There may be other assets that you can sell, or you might have other investments that you can cash in.
  • Pension drawdown – If you have pension savings, you can talk to a financial advisor about how to access them.

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What companies offer home reversion programs?

There are now very few home-reversion companies left, as lifetime mortgages have taken home reversion plans to the forefront of home lending. They offer only existing customers’ services and do not offer new plans.

You cannot apply for a home-reversion plan without speaking with an advisor.

Although home reversion companies will connect you with an advisor, they can only recommend products and cannot discuss your options. It is best to speak with an independent specialist.

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Does home reversion differ from England?

There are home reversion plans available in all parts of the UK. However, the laws and standards may differ in England, Wales, Scotland, and Northern Ireland because of differences in the legal systems.

Not all home reversion plan providers in Scotland are the same, and many local equity release specialists recommend lifetime mortgages.

People over 55 years old with property values over £120,000 can afford home reversion plans in Ireland. Ireland has fewer providers due to its low popularity than the UK.

Talk to an expert in equity release.

It’s essential to consult an expert before you commit to a home reversion plan. This decision will have a lasting impact on your financial situation and can be very costly to reverse due to rising house prices.

Many equity release specialists are available to assist you when you click the link below.

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Is there a regulation on home reversion plans?

The Financial Conduct Authority regulates home reversion plans. The Equity Release Council is an organisation that establishes standards and protects equity-release customers.

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