Which scheme is right for you?
Both lifetime mortgage and home reversion schemes have their advantages and disadvantages. Here is a comparison of some of the key features:
- How much cash do you want? With a home reversion plan, you can sell 100% of your home. This will give you more money from the property than a lifetime Mortgage. Of course, this also means you will have nothing to pass on to your family.
- How important is it to know what you’re leaving behind? If you only sell a proportion of your home under a home reversion plan then you know that the remaining proportion will always be available to pass on after you die. The same can’t be said for most Lifetime Mortgage schemes where the full value of the home can be used up if you live for a long time and the value of property does not increase (or even falls).
- How soon do you want to take out a plan? Home reversion plans are not usually available until the youngest applicant is 65. In contrast, lifetime mortgage plans are available from 55.
- How long are you planning to live! With a home reversion plan the interest is charged up front ( based on average life expectancy). If you die sooner than expected (or intend to sell the home shortly after taking the plan), you could loose out because you’ve already paid the interest in effect. With a lifetime mortgage, your beneficiaries would only be liable for the initial amount borrowed plus interest up to the point you die or sell the property.
- Are you receiving State benefits? You may lose out if you are currently receiving State benefits. Any scheme should only be considered if the benefits gained outweigh any reduction in State benefit or grant entitlement.