Home reversion

This type of equity release lets you sell all or a percentage of your home to access the money tied up in it. You can continue to live there rent free. The loan is only repaid after the property is sold when you die or move into long-term care.

It’s important you know there are risks involved – find out more in our guide What is equity release?

A company, or provider, buys all or part of your home. In return, you get a cash lump sum or smaller amounts to give you a regular income.

You can carry on living in the home under a ‘lifetime tenancy’ until you die or move into long-term care. 

The amount you are offered for your property can be much lower than the market value of your home – usually only between 20% and 60%. It can also vary depending on your age when you apply. 

This is because: 

• the company cannot sell your home until it’s permanently empty 
  
• the company allows you to carry on living there, either rent free, or on a fixed rent or with an agreed annual increase. 
  

When your home is sold, the money is split between you (or your estate) and the company – based on the percentage you both own. 

Eligibility for home reversion plans varies between providers so always check with an adviser. 

For some plans:  

• all applicants must be over 60 (or 65) 
• you must be mortgage-free and own your home in full 
• there’s a minimum property value (typically £70,000). 

Costs vary depending on provider and you might have to pay: 

• an arrangement fee to the provider 
  
• advisers’ fees to set up the scheme 
  
• valuation fees – this decides the value of your property, so get an independent valuation 
  
• legal fees – the terms of the lease must be checked by a solicitor appointed by you, and not by the reversion provider.  
  

You may also have added costs after you have sold, including: 

• buildings insurance 
  
• home repairs and maintenance costs 
  
• ground rent or chief rent 
  
• a monthly rental fee (if applicable under the terms of the lease). 
  

You must hire a solicitor – your provider can’t release any money without proof you’ve taken out legal advice. This is required by the Equity Release CouncilOpens in a new window

Use our guide to help you find the right solicitor.

If you don’t want to move, and the full value of your home isn’t needed for inheritance, then home reversion could be a possibility. 

Always speak to an equity release specialist about the downsides. 

• The risk is higher than standard mortgages – you miss out financially if your home increases in value as you’ve sold part, or all, of your property. 
  
• You no longer own your home (or only own part of it). 
  
• You get less than market value for your property. 
  
• You’ll be offered a lower percentage of your home’s market value if you are younger.  
  
• Cash from your home could mean you’re ineligible for certain means-tested grants, benefits and local authority support for care 
  
• You’ll need a solicitor to review the lease. 
  

If any of this could be a problem, then home reversion might not be suitable for you. Remember to explore the alternatives to equity release.

• Can you transfer the home reversion scheme if you want to move? 
• How will taking out a home reversion affect your tax position and your eligibility for benefits, grants and local authority care support? 
  
• What conditions does the home reversion impose on you for continuing to live in your home? 
  
• If you want a regular income, how will you achieve it? Will the income be guaranteed? Will it be fixed or variable? How often and for how long will it be paid? 
  
• Can you access more funds due to your age or medical conditions? 
  

A specialist adviser will help you understand your choices and make the right decision for your circumstances.

• Find an adviser using the Equity Release Council (ERC) directoryOpens in a new window