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Home reversion plans

  • Home reversion plans offer a cash lump sum, regular income, or both
  • You sell all or part of your property to a reversion company for less than market value
  • We'll explain the benefits, risks, and costs of equity release

What is a home reversion?

A home reversion plan is a type of equity release where you sell all or part of your property to the reversion company in exchange for a cash lump sum, regular income, or both. You and any joint applicant must be a UK homeowner aged 65+ to qualify.

Home reversion plans can be useful for inheritance planning (Key doesn't offer advice on inhertiance tax planning, so make sure you speak to a specialist financial adviser if this is important to you).

Unless you've sold the full value of your home, you’ll know exactly what proportion of your property you’re able to leave as inheritance. On top of this: 

  • Your share of the property will benefit from any house price increase

  • As a home reversion isn't a loan, there are no interest rates - your retained percentage share will never change unless you decide to sell more of your home to the reversion company

  • You can spend the money you release in a number of ways

We only offer advice on home reversion plans through Key Group.

As an expert equity release adviser, we think it's important to help customers understand all their options when it comes to releasing equity from their home. As a part of our advice process, we’ll consider whether other options may be suitable and can arrange advice on these if appropriate through our wider group.

If you go ahead, you'll only be charged the same £1,299 advice fee you'd pay with us, even if their fee is usually higher.

How does a home reversion work?

A home reversion plan involves you selling all or part of your home to a reversion company for lower than market value. The home reversion provider takes legal ownership of your property, but you remain as beneficial owner of your home with a guaranteed lifetime lease.

There's no interest to pay on the money released and no monthly payments to make. The home reversion plan comes to an end typically when the last remaining applicant passes away or moves into long term care. The home reversion provider then takes its percentage share of the sale proceeds.

You don't receive full market value for the portion of the property you sell with a home reversion plan because the buyer (the home reversion company):

  • Usually lets you continue to live there without paying rent - some home reversion companies may charge rent that'll increase by a set annual percentage (subject to the terms of your agreement)

  • Can't sell it until you or the last remaining applicant passes away or moves into long term care - you do have the option to buy back the share you sold to the home reversion company, but this would be at the full market value

  • Grants you the right to carry on living there under a lifetime lease and has to wait indefinitely for a return on their investment (these terms will vary depending on the home reversion you choose)

An example of how a home reversion works

 
Laura's home is worth £200,000
She sells 50% to home reversion company for £50,000
After she passes away, her home's sold for £300,000
The home reversion provider's 50% is worth £150,000
The remaining value left to Laura's estate is worth  £150,000

ⓘ Your property value may decrease. This would impact the remaining value to be left to your estate if you go ahead with a home reversion plan.


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Benefits and drawbacks of a home reversion plan

We understand it’s important you have all the information you need about equity release to make an informed decision in your own time.
 

Home reversion benefits

Some of the benefits of a home reversion include:

  • You can stay in your own home for the rest of your life, or until you move into permanent care

  • There’s no interest to pay because a home reversion is not a loan

  • You’ll benefit from any increases in the value of your property on any unsold percentage

  • You can protect a portion of your property for inheritance, providing you do not sell 100% of your home

  • Releasing equity from your home is tax-free

Home reversion drawbacks

Some of the drawbacks of a home reversion include:

  • You'll receive less than the market value when selling your property to the home reversion provider

  • It's costly to cancel the plan early as you would need to buy back your property at the full market value

  • You won't be the legal owner of the property

  • A home reversion plan will reduce your financial options in the future

  • Dependent on the percentage of your property you sell, you may be left with limited or no property equity remaining

What does a home reversion plan cost?

It's important you're clear on the terms and set up costs of your home reversion plan. To complete the equity release process, you'll need to instruct a solicitor to act on your behalf. Your solicitor will make sure you're aware of all this information before you agree to go ahead with a home reversion plan. 

Depending on the provider you're recommended, here are some of the costs you may expect to pay if you go ahead with a home reversion plan:

  • Legal fees for a solicitor acting on your behalf

  • Arrangement fees and/or valuation fees

  • Equity release adviser fees

Alternatives to a home reversion plan

Make sure you're aware of some of your other options before you agree to go ahead with a home reversion plan.

Downsize or remortgage

  • Downsizing can be a good way to free up cash if you're happy to move home

  • Remember you could also consider a retirement mortgage to help reach your later life finance goals

Asking for financial help

  • If your family have the financial means, they may be able to offer you a gift or a loan

  • They'll often be all too happy to help you find a solution

Savings or investments

  • If you have enough money saved, you should look to use this first

  • Consider whether you'll need it for other things in the future

Lifetime mortgage

  • For homeowners aged 55+ with a property worth £70,000+

  • A loan secured against your home

Is a home reversion plan right for me?

A home reversion plan is a type of equity release which could help UK homeowners take control of their finances. There are other options available which you should also consider to understand if a home reversion plan is right for you. 

Explore all your options and see if Key could help you put the life in later life. Request your free, comprehensive guide today.

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Why choose Key as your later life finance adviser?

If you're considering your later life finance options, it's important you get specialist advice to make sure you find the right product for your needs. So why should you choose Key as your adviser?

We're regulated experts

Key is regulated and a proud member of the Equity Release Council
 

Trusted award-winners

We've had 17,000+ excellent Trustpilot reviews and won 80+ awards, including Best Later Life Broker 2022

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Highly experienced

We have over 25 years' experience in helping over-55s with tailored advice on later-life products. We’ll never put you under any pressure to go ahead. If we believe an alternative product is better suited to you, we’ll tell you.

Home reversion frequently asked questions

When it comes to releasing equity from your home, we understand that you may have questions too. To help, we've provided some answers to home reversion questions. If you're still unable to find the information you need, we're just a phone call away.

The amount you could release with a home reversion plan depends on a few factors. This includes your property value, the percentage of your property sold, your age, and, with some plans, your health.

The a​​mount available is dependent on the age of the youngest applicant.

A home reversion plan is one type of equity release. Another type is a lifetime mortgage - a loan secured against your home.

A lifetime mortgage lets you access some of the tax-free cash tied up in the value of your home while retaining full ownership. It’s a loan secured against your property, and to be eligible, you need to be aged 55 or over and your property needs to be worth at least £70,000. This is a lifetime commitment, so it's important you check the benefits and drawbacks of a lifetime mortgage before you go ahead.
 

Product Home reversion Lifetime mortgage
Minimum age 65 55
Minimum property value N/A £70,000
Access tax-free funds
Loan secured against your home ×
Pay interest on the funds released ×
Still legally own your home ×

ⓘ This is a simple comparison to help you understand the main differences between a home reversion plan and a lifetime mortgage. It's not a comprehensive view, so make sure you discuss this in detail with your equity release adviser.

Before making any decisions about equity release, you need to get expert equity release advice - this is a regulatory requirement to make sure you understand all your options and find a product that's right for you.

Your equity release adviser will explain your options, and outline the benefits and drawbacks of a home reversion, along with your other equity release options. This will help you make an informed choice that's right for you.

You may also have other later life mortgage options to consider, as you can only take out a home reversion plan if you're aged 65+.

With a home reversion plan, you sell a fixed percentage of your property. The percentage you keep will be passed on to your estate.

As property prices go up and down over time, it's difficult to predict the future value of your property when it's sold, as well as what inheritance will be available.

All home reversion plans that meet the Equity Release Council standards guarantee lifetime tenancy in your property and can be transferred to a new property. This is subject to the approval of the plan provider.

In return, you must maintain your home to a good standard and follow the terms of the home reversion agreement.

Page last updated: Wednesday 26 June 2024