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Compare Home Reversion Mortgages

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Compare Home Reversion Mortgages

Compare Home Reversion Mortgages

Home reversion plans are among the most popular equity release schemes of the day. After all, where else can you sell part or all of your property for a tax-free lump sum? Well, if you are looking for an extra stash of cash to complete a project or regular, periodic payments as additional income, a home reversion plan could be the solution.

The Home Reversion Calculation

The amount of capital given in a home reversion plan is dependent on several factors. It is important to note that different lenders look at varying factors when determining the amount of equity to be released. However, there are some basic considerations that cut across the board. These considerations include the following.

• Property valuation – all properties that are to be considered for a home reversion pan must be at least 80,000

• Age – the youngest home owner should be no less than 65 years

• Property percentage to be reversed – the home owner can get up to 100%

• Home owners’ health – ill health increases the amount given in a home reversion plan

The math is simple; this equity release scheme is based on life expectancy. Therefore, any condition (illness, age etc.) that is perceived to reduce life expectancy is likely to increase the amount of tax free cash you get.

Home Reversion Deals

There are two service providers that offer deals on home reversion plans. Let’s compare these deals and see what you get out of your home.

Provider

Product

Lump sum (£)

Equity released (£)

Percentage Sold (%)

Maximum Period

Crown       

Crown ER Plan

150,100

150,100

60.04

For Life

Bridge Water

BW Flexible ER Plan

50,000

150,112

60.04

For Life

Bridge Water

Secured Escalating Release Plan

Negotiable

Dependent on property value

Up to 100

15 years

Bridge Water

Maximum Release Plan

Maximum of property value

Dependent on property value

100

For life

Bridgewater Flexible ER Plan

In this plan, you are allowed to sell the portion of the property that you feel comfortable with (which can be anything between 25% and 100%). In this plan, you will get a lump sum (and periodic payments) for life. The requirement is that the property value has to be at least £75,000.  You still retain the rights to live in your property rent-free for life.

The plan starts with home owners who are at least 65 years of age. The home owner should be willing to release £25,000 or at least 25% of the property value. You can get additional protection from early vacancy guarantee, Consumer Financial Protection, and House Prices Inflation Protection.

Crown Equity Release

Crown is keen on giving plans that adhere to the rules set by the Equity Release Council, same as all other reputable service providers. In this plan, you can sell whatever percentage of the property you fancy. For your property to be considered for this plan, it has to be at least £80,000 in value, and the youngest home owner should be at least 65 years old.

Crown Equity Release providers are very particular about the property they consider for home reversion. Any property on short leasehold, with non-standard construction or ex-council properties are considered each on its merits. You can release up to 1000% of your property’s value. If a partial sale is made, it can later be amended, with a minimum of £10,000 release at a time.

A Little More About Home Reversion Plans

As opposed to other equity release schemes, a home reversion plan does not require you to pay any interest. It is simply selling your home yet you are allowed to still stay in it rent free. You imply become a co-owner (in case of a partial reversion). Be sure to check out comparing owner perceptions with transaction-based indexes. Keep in mind that the proceeds from that sale are tax-free!

Your Obligations as Home Owner

As much as you are a co-owner, you will still be required to take care of the property as if you were still the sole owner. As such, the property is expected to maintain its value over the course of the reversion plan. 

When taking up the home reversion plan, it is important to note that you will be required to pay your own legal fees as well as valuation charges. You will also need the services of an experienced adviser, especially one who is very familiar with equity release schemes.

Pointers to Keep In Mind

Home reversion plans can be one of the housing market risks in the United Kingdom. Therefore, before taking up a plan, it is important to ascertain that it is the right product for you.

For starters, as much as you will never pay rent for as long as you live in the property in question, the reversion plan will affect long term financial planning, inheritance, benefits and comes with some tax complications. Be sure to check out HERMIT for more pointers. It is therefore important that you consult an experienced financial adviser before taking up any equity release scheme.

Benefits of equity release

Benefits of equity release

Why an equity release scheme would work for you

Loans can be useful for people throughout their lives for a number of reasons. Money is required for taking some huge steps in live like moving or buying your first car or even paying college. There are other cases too, big purchases, home improvement, investments of any kind, healthcare or bills in general, even paying up debt – which kind of goes without saying but still. And when you need much more money than you can make in a short time, you can borrow some.

Big sums of money borrowed will often require some sort of important guarantee. You can apply for a loan against a valuable property of yours, so the lender is more likely to accept it. Mortgages are among the biggest loans you can apply for, and you will take the money against your house or any other estate property you own.

Often a mortgage is a mean to get a property, but in some cases you can use the inverse scheme, using your house’s equity to pay for other things. The word equity refers to the value of house in terms of money, which is the result of its real price less all mortgages or other debts withstanding. The more your house is worht and the less money you owe on it, the more equity you possess. You can turn that equity into cash with a reverse mortgage deal, mostly known as equity release scheme. 

Since you are repaying with a fraction of your property, equity release might not be the best solution for everyone. However, in some cases it’s actually a great solution for your financial problems or simply a convenient boost for your life with all that extra cash. 

Who benefits from equity release?

Reverse mortgages are aimed to 55+ years old people, and the loan is paid back with the property’s sale after the borrower dies or moves to long term care. It goes in detriment of inheritance, because the lender will take some or all of the money from the sale of the property, according to the terms of the deal made before. However, if the borrower isn’t interested in leaving a big inheritance or doesn’t have children, it is a very convenient way to use up what is left of the property’s equity in a way that the borrower chooses. 

Part of the agreement of all equity release deals is that the borrower can still live in the property and the lender, altough might be already titular owner of the house – depending on the scheme – has no right to evict the borrower or force them to move out unless stated in fail to repay terms. It works like a long term lease for the borrower, along with a line of credit that the borrower may access at any point in time, always following the terms agreed upon with the lender.

So, in other words, when you engage in an equity release scheme, you can still live in your house, carry out home improvement and enjoy the rest of your life while at the same time accessing your property’s equity as cash. Home Equity Lines of credit are a great financial options for those who have little to no mortgage to pay, because their property’s equity is at its maximum.

Assessing benefits

Running a benefit analysis on equity release schemes – or loans in general for that matter – is mandatory when you plan to borrow money. There are complex terms in every agreement and you should be aware of all of them before you sign up, lest they turn on you later and make you loose money or even your house. Comparing terms and benefits from different lenders and options will help you save money and dodge possible debt scenarios you don’t want to deal with. Hiring a lawyer to assess you is practically a must here. An advisor will help you review the pros and cons on each offering and guide you so you can pick the best option for you. It might seem like a loss of money, but in the end you will save much more by making the right choice.

In some countries, like the United States, there are equity release mortgages offered by the government. You can check all these possibilities at benefits.gov. Find out if in your country you have such a possibility, because government loans tend to be easier to pay and less harsh on consequences if you fail to pay. Add them to your list of compared benefits so you can make your ultimate decision.