01. Would I still own my home?
Home Reversion Plan
The deeds and therefore ownership of the property would be transferred to the home reversion provider. You would retain a beneficial interest in any part of the property not sold in the home reversion.
Lifetime Mortgage
You continue to have 100% ownership of your property.
02. How much money would I be able to raise through equity release?
Home Reversion Plan
This depends on your age, whether you are single or a couple, the value of your property, your health and the percentage of the property you sold. The older you are, the more you can release. Single people can generally release more than couples. It is usually possible to release a larger sum through a home reversion compared with a lifetime mortgage.
Lifetime Mortgage
Releases generally range from 15% to 55% of the value of the property, depending on your age, and (under some schemes) your health. The older you are, the greater the cash sum that can be released.
03. How much money would I ultimately owe/have to pay to the company?
Home Reversion Plan
The amount payable would be the ultimate sale value of the proportion or percentage of the property you sold to the home reversion company.
Lifetime Mortgage
The amount payable would be the initial amount borrowed plus the interest accrued at the time of sale. All SHIP plans guarantee that the amount payable cannot exceed the ultimate sale value of the property. This is known as the ‘no negative equity’ guarantee.
A fixed interest option is available where a known repayment figure is set at the outset and is not affected by the term of the loan. Though a potentially cheaper option the loan could be more expensive if it is repaid early.
04. What impact would rising or falling house prices have?
Home Reversion Plan
You and the home reversion company mutually share any increases or decreases in the value of the property in accordance with the proportions of the property you sold/retained.
Lifetime Mortgage
You retain the full benefit of any increases in the value of your property. Similarly, if your property price decreases you will stand the cost of the decrease in property value, which would adversely affect the capital available after the loan has been repaid.
05. When would the loan need to be repaid and can I transfer it to a new property?
Home Reversion Plan and Lifetime mortgage
The outstanding amount is repaid on your death or, in the case of a couple, on the death of the last survivor or following a move into permanent long-term care or to another property. All SHIP-approved plans allow the plan to be transferred to a new property, provided the property meets with the approval of the plan provider.
06. Who would be responsible for the maintenance of my home?
Home Reversion Plan and Lifetime mortgage
With both Home Reversion Plans and lifetime mortgages you have to maintain your property to a reasonable standard.
07. Would there be any effect on inheritance tax (IHT)?
Home Reversion Plan
A Home Reversion Plan could reduce the amount of IHT, as the proportion of the property you sold would fall outside your estate.
Lifetime Mortgage
A lifetime mortgage could reduce the amount of IHT payable by your estate as the amount outstanding is deducted from the value of your property before IHT is calculated.
08. Would entitlement to means-tested benefits be affected?
Home Reversion Plan and Lifetime mortgage
This is possible depending on the amount and purpose of the release. You should ask your adviser to provide you with an assessment of the possible impact on means-tested benefits.
09. Would I still be able to leave an inheritance?
Home Reversion Plan
If you sold your entire home there would be no inheritance from the value of the property. However, if you sold part of your property then the value of the share you retained would provide an inheritance.
Lifetime Mortgage
If you sold your entire home then there would be no inheritance from the value of the property. However if you sold part of your property then the value of the portion you retained could be used to provide an inheritance.
It is possible there could be no inheritance. Your adviser will be able to give you an indication of the possible impact on your estate.
10. How much will it cost me?
Home Reversion Plan and Lifetime mortgage
Fees vary from plan to plan, as do fees charged by the adviser for arranging your release. You must be made fully aware of the costs involved before proceeding with a plan. Costs include valuation fees, solicitors’ fees, plan provider administration fees and broker fees.
11. Can I lose my home?
Home Reversion Plan and Lifetime mortgage
You are always secure in your home with a SHIP-approved plan provided you adequately maintain your home and fulfil the terms of the agreement.
