How a Home Reversion Plan Can Help Fund Your Care

According to homecare.co.uk, a home reversion plan is “a type of equity release which allows you to use money that is tied up in your home to pay for care without having to move out.” As we age, we all have concerns about how we’d fund essential care if and when the time comes, and by using a home reversion plan it may offer a potential solution for meeting the necessary costs. This means that you can receive the care you need while continuing to live in the home you love by selling a share or all of it, “at less than its market value to a home reversion provider in return for a tax-free lump sum, regular payments or both.” As with any financial plan, especially one that involves using equity tied up in your home, expert advice should be sought from a suitably qualified financial advisor.

According to the Equity Release Council, to get a home reversion plan, you need to be “a homeowner and the youngest applicant needs to be aged at least 55 years old to qualify. Please note, the minimum age criteria for Home Reversion Plans can sometimes be higher than 55 years old.” Consequently, if there are two people in the home and one is older than the other, you will need to wait until the younger person has reached the minimum requirement, even if the older person is significantly older and in need of care. For instance, if the husband is in his 70s but his wife is only in her early 50s, they may not be eligible for a home reversion plan to fund his care until his wife passes 55, or even older in some cases. It’s important to seek independent advice and you can search the Financial Services Register at the Financial Conduct Authority (FCA) to find professionals that can help in your area.

A home reversion plan “allows you to access all or part of the value of your property while retaining the right to remain in your property, rent free, for the rest of your life” says the Equity Release Council. The provider of your home reversion plan will purchase a portion or the entirety of your house and will provide you with a tax-free cash lump sum, or regular payments. This ‘lifetime lease’ means you can remain living there for the rest of your life.

A lifetime mortgage means you don’t have to make monthly repayments – unlike a conventional mortgage – unless you choose to. This will then reduce the amount of interest that needs to be repaid when you die or move into full-time care. If you’re part of a couple, the repayment isn’t made until you both die or have to go into care, meaning that you are both able to live in the home you love for the rest of your lives.