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Home reversion plan

If you're over the age of 65 a home reversion plan could allow you to sell all or part of your home in exchange for a cash lump sum and rent free lifetime tenure in your property.

This type of equity release allows you to release money from your home without the requirement to make repayments and with the ability to live rent free in your property for the rest of your life, or until you go into long-term care.

How much will I receive for the share of my property sold?

You’ll receive less than the full market value for the share of your home sold (typically between 35% and 60%). The amount you receive is discounted in exchange for the rent-free tenure in the plan provider’s share of your property. The older you are when the plan begins the higher the amount you will receive for the share sold.

What if the value of my property changes?

The home reversion provider and you benefit from any increase in the value of the share in your property if house prices increase. Decreases in property value are also shared.

These plans are popular with those who want to guarantee an inheritance as the percentage sold is fixed. Ideally you would not expect your property to significantly increase in value, and to benefit from your 'pre-paid rental agreement' you would expect to meet or exceed normal life expectancy.

 

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Frequently asked questions

When is a home reversion plan repaid?

The property will normally be sold on death or following a move into permanent long-term care. The home reversion provider will retain their percentage of the sale proceeds in accordance with the percentage of the property they own, and the remainder will pass to your estate.

Can I transfer my plan to another property?

All Equity Release Council plans that meet SHIP Safe Home Income Plan criteria are portable; this means they can be transferred to a new property, subject to the approval of the plan provider.

How much money will I owe the provider when the plan finishes?

When the property is sold the provider will retain the percentage of the sale proceeds agreed at the start of the plan. 

For example, if you originally sold 40% of your property to a provider, then they’ll retain 40% of the sale proceeds when the house is sold.

As we cannot predict the future value of your property we also cannot predict the long-term cost associated with this plan. Property prices could be higher or lower than they are today.

How much money can I borrow via a home reversion plan?

The amount you can borrow depends on the value of your property, percentage of the property sold, age and health. The older you are when you start the plan the more you will usually receive for the share of your property sold. 

Who would be responsible for the maintenance of my home?

With home reversion plans you’re responsible for the maintenance of your property to a reasonable standard.

Could entitlement to means-tested benefits be affected?

Yes, depending on the amount borrowed and purpose of the release.

Before making a recommendation your advisor will complete a full benefits assessment looking at the impact equity release may have on any means-tested benefits you receive now or are likely to receive in the future. 

What impact would changing house prices have on my plan in the future?

You and the home reversion company share any increases or decreases in the value of your property. Your exposure will only be on the share of the property you have retained.

What impact will equity release have on my on inheritance tax liability?

A home reversion plan could reduce your inheritance tax liability, as the proportion of the property you sold would fall outside your estate for tax purposes.

Will I still be able to leave an inheritance?

If you sell your entire home then there would be no cash due from the eventual sale of the property. However, if you only sell a percentage of your property then the value of the share you retained could be used to provide an inheritance.

As we can’t predict the future value of your property we also can’t predict the amount that could be available as an inheritance. Property prices could be higher or lower than they are today when the property is eventually sold.

Would I still own my home?

The deeds and therefore ownership of the property would be transferred to the home reversion provider. You’d retain a beneficial interest in any part of the property not sold to the home reversion company.

What fees are involved with setting up a plan and when must they be paid?

There are four main costs associated with setting up any equity release plan.

Survey fee – This is payable when you submit your application. The amount usually depends on the estimated value of your property.

Application fee – This is paid to the provider when your plan completes. This fee can be borrowed as part of the release and is typically £695.

Legal fee – We recommend that you agree a fixed fee with your solicitor once your equity release offer has been confirmed. Typical legal fees range between £400 and £500.  If you’re purchasing a property, or the legal position of your property is not straightforward, additional costs may apply.

Advice fee – StepChange Financial Solutions does not charge an advice fee.

Can I lose my home?

Providing you adequately maintain your home and fulfil the terms of the agreement, all plans that meet the Safe Home Income Plan (SHIP) standards via the Equity Release Council guarantee lifetime tenancy in your property, regardless of what happens to future interest rates, property values or investments.

How long does an application take to complete?

The time taken to complete an application varies, depending on each applicant’s individual circumstances. Typically you should allow  four to six weeks from the time you submit your application. All funds will be released directly to your solicitor.

If you've got any other questions or if you would like to book an appointment with an advisor please call us on 0808 168 6719 (free from UK landlines) or complete our enquiry form.

This is a home reversion plan. To understand the features and risks, ask for a personalised illustration.

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Which? equity release report

Which equity release report

Under our previous name, CCCS Equity Release, we were the only advice service to pass all of Which?'s equity release tests

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Listen to our financial advice manager, Tom Moloney, answering questions with Ruth Alexander on BBC Radio 4's Money Box.

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