Help With Home Reversion
May 25th, 2010 | 
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An Equity Release is also considered a home reversion. There are two types of loans that fall under this category; lifetime mortgages and home reversion schemes. The plan requires the homeowner to sell their home or a percentage of it. If the homeowner decides to sell a percentage of the home, they will need to sell it to a Reversion Company. Although the homeowner has sold parts of their home, they still have the right to live in the home rent free. (This can occur for the rest of the homeowner’s life). The money that is received by the homeowner can either be received in one large lump sum (all at once), or on timed monthly payments.
A home reversion or equity release is very beneficial because the homeowner can receive cash upfront and not be responsible for regular monthly payments. The company is not allowed to sell the home, even if they own a percentage of the home. This clause stays into effect until the homeowner (or the homeowner’s spouse) dies or the consumer goes under long term care. The homeowner will not get 100% of the market value of the home. This is because the company will have to wait 10 to 30 years before selling the home.
Homeowners should expect to receive at least 20%-60% of the overall property’s value. The actual percentage depends on a lot of factors such as the age of the homeowner and their spouse. The older the homeowner is, the more money they will receive. Most of the time, the reversion company will go with the youngest of a couple (if the homeowner has a spouse).
The homeowner will sell the legal ownership of their home and become a legal tenant. Homeowners should not be concerned with this clause since an iron clad legal document, called a ‘Lifetime Lease’ is signed by the homeowner. This will allow the homeowner to decide whether they want to continue to live in the home until they (or their spouse) dies. Even though the homeowner is legally considered a tenant, they are still responsible for the upkeep of the home and any other improvements needed. For example; if the home is a condo, the homeowner will still be responsible for association fees.
An equity release is a good idea for those who want to receive cash for the equity they have built up in their home. If the homeowner is expecting to live in their home longer than 5 years, then this is a great option.
Posted in Home Equity | 
Tags: Equity Release, Home Reversion Schemes, Legal Document, Lifetime Lease, Lump Sum, Money, Mortgages, Upkeep