Home Reversion Calculator

Many people that search for lifetime mortgage alternatives will stumble across home reversion plans as a potential option.

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Find Out How Much Cash You Could Release Today?

Many people that search for lifetime mortgage alternatives will stumble across home reversion plans as a potential option. The schemes unlock equity against property without any rolling interest applying to the amount received, making it an attractive prospect.

You can discover how much you could receive in equity using the home reversion calculator and learn more about the plan in the guide below.

What is a Home Reversion Plan?

A home reversion plan is an equity release scheme where a homeowner sells part or all of their property to a lender. They will receive tax-free cash either as a lump sum or in instalments in exchange for the ownership of the property.

Despite the lending company becoming a partial or complete property owner, the home reversion plan allows you to continue living there rent-free. That’s until you pass away or move into long-term care.

The agreement is called a lifetime lease, where you won’t need to make any payments to the holding company throughout the contract.

The plan allows the holding party to buy back the portion of the property ownership at market value should they want it back before the end of the contract. However, there could be a significant increase in cost, and often lenders will purchase a share of your home at a less-than-market value.

So what does a home reversion calculator do to help understand these equity release schemes?

What is a Home Reversion Calculator?

A home reversion calculator is a tool that calculates how much money you could receive on a home reversion plan. It will ask for a few bits of data to determine the equity release based on age, property value, and other factors.

The home reversion calculator is different from other equity release calculators as it helps understand a plan that’s not a mortgage or a loan. Instead, you are selling the property where the tool suggests how much equity you’ll get for the share you want to sell.

Often, the amount you’ll get in exchange for a share or total home ownership will not be at market value. The calculator will suggest this, where you can connect with an equity release specialist after you receive your results.

Can I Trust a Home Reversion Calculator?

Like any equity release calculator, all the returned information is an estimate and used only as a rough guide. The home reversion calculator considers all factors to provide an accurate picture of how much equity you can receive for your home. Still, the amount offered in reality can differ from what’s shown.

So how do you use the home reversion calculator to gauge what equity you can release?

How Do I Use the Home Reversion Calculator?

We compare plans from the leading equity release providers

The home reversion calculator will ask for a few more bits of information about your current circumstances. That’s because there are more variables surrounding a home reversion scheme than other equity release plans.

Here’s how to use the home reversion calculator.

  • Input the age of the youngest homeowner (at least 60 years old).
  • Select your gender.
  • Choose your marital status (to indicate a single or joint application).
  • Input the estimated value of your property (must be at least £80,000).
  • Write in your postcode.
  • Select the percentage of the property you’d like to release.

So once you click ‘calculate’, how is all this information processed?

How Do Home Reversion Calculators Work?

Home reversion calculators need that extra information about your circumstances because lenders tend to have stricter lending conditions. Prospective sellers must meet these criteria to get approved for a home reversion scheme.

Once you click the ‘calculate’, the tool will crunch the data provided and return the potential amount of equity you could release under a home reversion scheme. The calculator will analyse many different providers to get as accurate a sum as possible, but it isn’t definitive.

An equity release specialist can add more certainty to your home reversion plan. Ensure you get in touch with one to get a more accurate reading of how much you could get in equity and the terms behind the scheme.

If you proceed to connect to an equity release expert, you’ll get asked to provide your phone number and email address so they can contact you.

So how much could you get by selling part of your property in a home reversion scheme?

How Much Cash Can I Release with a Home Reversion Scheme?

In theory, you could sell your property to a lender under a home reversion scheme, giving them 100% ownership in exchange for a cash lump sum. However, this is a rare practice as its usually not beneficial to the homeowner, nor do lenders prefer to take the entire asset.

Lenders typically buy a share of 30% to 60% of your property’s perceived value. The rate offered on your home depends on a few factors, including age, property value, and how much of the asset you want to sell.

Usually, you’ll see that older applicants get offered more significant amounts of equity for a share of the property. That’s because lenders expect a return on investment sooner. They don’t expect the person to live as long, and the risk of devaluation isn’t as high.

Applicants for home reversion plans typically consider the idea as a lump sum of cash that doesn’t need to get paid back. But considering it’s an equity release scheme, does that mean it’s subject to interest?

Do I Pay Interest on Home Reversion Plans?

Those who unlock equity against their property in a home reversion scheme will not have to pay any interest. The plans should be considered a sale rather than a loan or a mortgage, not borrowed money.

Because there’s no repayment involved, the money you receive from selling is not subject to interest. That notion is another reason why those researching equity release options consider home reversion; the plan gets settled almost instantly without the risk of rolling interest.

Once you pass away or move into long-term care, the percentage of the property sold to the lender is how much they’ll take from the final sale. But with below-market valuations and the provider owning part or all of your home, would this plan be safe for an applicant?

Are Home Reversion Plans Safe?

Understandably, home reversion plans may be a bit of concern, especially where ownership of your home is involved. However, the services get regulated by the Financial Conduct Authority (FCA), safeguarding prospective applicants from any malicious actions.

The best lenders are also members of the Equity Release Council (ERC), offering protections and reducing risks for consumers, including:

  • Enforcement of the lifetime lease detail so you’ll never have to leave your property until sold (after death or admission to care).
  • The guarantee of your ability to move your scheme to another property as agreed by the lender

Even though home reversion plans are safe, it’s still vital to understand the full impact of a home reversion scheme. Equity release experts can offer valuable insight into your financial future and further elaborate on the plan’s risks.

So let’s wrap up our home reversion calculator guide with a few commonly asked questions.

Frequently Asked Questions About the Home Reversion Calculator

Find some of the leading questions that prospective home reversion applicants ask below.

How Can You Use the Money from a Home Reversion Scheme?

As with every equity release plan, you can use the money however you wish. Many people who sign on to the scheme use the cash for home improvement, care expenses, clearing debts, taking holidays, helping families, and much more.

Is a Home Reversion Plan a Good Idea?

Home reversion plans will be suitable for many seeking a cash injection. However, it may not be a good idea for everyone. Seeking information from an equity release expert can help answer any concerns about the scheme.

Will Home Reversion Affect My Means Tested Benefits?

You will not lose access to state pensions by following through with a home reversion plan. However, other means-tested benefits, such as universal credit and pension credits, maybe in jeopardy.

The effect of home reversion largely depends on the amount of cash you receive selling part of your property.

Will My Home Reversion Money Get Taxed?

No, the money you get from the scheme is tax-free. It should get noted that a significant amount of cash injected into your estate could affect your tax position.

Also, if you plan to pass down the cash, it may be subject to inheritance tax.

How Should I Proceed After I Get My Calculator Results?

The home reversion calculator will estimate how much you could receive selling part or all of your property in a plan. If the scheme seems attractive to your current needs, you can click the ‘compare plans’ button to proceed.

The platform will request some personal information to narrow down your eligibility for a home reversion and connect you with a specialist that can find the right plan for you. Trust that the broker will work to find a scheme that benefits your needs and addresses your equity release concerns.