How do they work? Although Just Retirement do not currently offer Home Reversion products, we understand it is important for you to have a full understanding of what they are and how they work.
- Home reversion involves your client selling part, or all, of their home to an investment company. This is often the reversion company, but could also be a private individual or another company. In return, they will give your client the option of a lump sum and/or regular payments for a fixed period.
- Your client can continue to live in their property for the rest of their life rent-free and remain responsible for its repair and maintenance and all household-related bills.
- If your client dies or moves into long-term care, the reversion company sells the property and takes the whole of the percentage sold to it, while your client’s estate receives the percentage retained by the client.
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Advantages
| Disadvantages |
| Your client knows what proportion of their home will be used at the outset. |
Your client becomes a tenant in their home as they have to transfer ownership of their property to a trust. |
| Your client can leave a fixed proportion of equity to their estate. |
Your client only benefits from any rises in house prices on the proportion not entered into the Plan (i.e. the percent they still own). |
| Often offer a larger lump sum than available under a lifetime mortgage |
If your client chooses to end their plan early, charges may apply. |
| The equity you release can be used to provide a lifetime income from the reversion company. |
Your client’s eligibility for means tested benefits may be affected, as might their options for moving or selling their home in the future |
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Can affect inheritance value for family members. |
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