With a home reversion scheme you sell all or part of your home to a company and continue to live in it as a tenant rather than the full owner. On your death the plan provider receives the full value of the part of the property you have sold. Schemes can offer a lump sum, a regular income or a combination of both.

Who buys your home?
When you join a Home Reversion Scheme, either the whole or a part of the legal title to your home is passed to the company operating the scheme or, in some cases, to individual investors contacted by that company. You then have a legal agreement by which you lease back the property for life. When you die, the property is sold and the investors will receive their share of the proceeds. If a full sale was arranged they will receive all the proceeds but if it was a part sale, the investors will receive their proportion and your beneficiaries will receive the remainder.

Where a reversion company finds a buyer rather than purchasing your property directly from you, the legal procedures can be more complex and prolonged, because there can be difficulties in finding suitable investors. Your financial adviser will be able to point out where this problem may exist and, in some cases, recommend alternatives. Your solicitor should take particular care to ensure that your right to a lifetime tenancy is completely secure.

Are you eligible?
The main factors affecting eligibility for a reversion scheme are:

Your age.
Generally the minimum age for most reversion schemes lies between 65 and 70.

The value of your property
The minimum property value varies between schemes, but £40,000-£50,000 is a reasonable guideline. The property must usually be free of any tenants.

The condition of your property.
The condition of the property is particularly important with a reversion scheme because the purchaser takes a direct financial interest in the property. Purchasers do not normally expect anything exceptional, but the property should be in a reasonable state of repair. They will also require that the property be properly maintained and not allowed to deteriorate in the future.

Outstanding loans or mortgages.
Normally, you must have paid off any previous mortgage. However, if you still have a mortgage outstanding, you can sometimes arrange to receive an initial cash sum in order to clear this when you arrange an HRS.

Home Reversion Scheme Resources

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