We all like to save money, but in today’s economic climate sometimes this can be difficult.
However, saving is actually a source of investment that proves to be helpful in times of financial trouble. And, the need to save and have an investment fund available is more important when people reach old age.
Equity release schemes are a good solution for older people to overcome their income problems if they do not have adequate savings. Current equity release schemes provide different means in which to provide peace of mind to elderly people so that they no longer need to support themselves with only a small pension.
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Home reversion equity release schemes
With the help of a home reversion scheme, you can sell your home or a part of it to a reversion company in return for a monthly income or a lump sum or both. Technically, you will become a tenant of , although you continue to live in your home rent free. You receive a lifetime tenancy from the reversion company which gives the right to live in the property for the rest of your life.
When your property is eventually sold, generally after your death, the reversion company will get its payout. For instance, if you sell 50% of your property to a reversion company, they will get half the sale proceeds including any escalation in the property value. Just as importantly your beneficiaries will also receive a guaranteed 50% of the sale proceeds. If you sell 25% of your property, the reversion company will get 25% of the proceeds etc.
Additionally, the reversion company will also pay you a fraction of the present market value for the share of property it purchases from you. This is because you continue to live in the property till your death, and the reversion company will have to wait to get their return.
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This illustrates one of the main advantages of home reversion schemes in that you can guarantee the percentage of the final property value that can be passed on.
This differs from ‘roll-up’ equity release schemes whereby there is no guarantee as to how much the beneficiaries will receive, if anything. Nevertheless, a no negative equity guarantee is included in all SHIP (Safe Home Income Plans) equity release schemes to provide the guarantee that no more than the final property value can be owed to the lender.
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For further advice on Home Reversion schemes please ring 0800 783 9652
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Tags: equity release, equity release schemes, home reversion, home reversion schemes
