SELL YOUR HOME QUICKLYConsidering home reversion? Things you need to know…
During the last couple of years, home reversion schemes have burgeoned in the UK. Also known as “reversing your home”, or “releasing your home equity”, this process enables homeowners to access their home equity towards boosting their regular income. This type of income solution may not always feature significant interest charges during the term of the home reversion loan. Yet upon the loan period expiring, the house is generally sold – and the lender takes the majority of the profit made from the home sale.
Negative implications of home reversion schemes
Under the above-mentioned contractual conditions, you can have your home equity lent to you either as a lump sum, or as regular deposits to supplement your income. Once the loan period comes to an end, the house is sold to repay the outstanding loan amount, with the bulk of the remaining profit from the sale going towards the lender – not towards the homeowner – making the effective interest paid on the loan extremely high.
This type of home reversion loan is often marketed to senior citizens – yet what happens if the homeowner outlives the duration of the loan period? Under such circumstances, former homeowners can be left virtually penniless and destitute, making this a particularly risky financial solution. Although some schemes do offer lifetime leasing options which guarantee you the right to live in the house for the rest of your life, the actual interest payable on such a loan may be either very hard to determine with accuracy, or high enough not to make home reversion a viable option.
Beware the small print
With home reversion or equity release loans, the small print can be unclear, or even downright deceiving. While some home equity lenders may allow you to benefit from any home value appreciation over time, others won’t!
Essentially, homeowners who opt for home reversion schemes may lose out on the profits they could have made from an appreciation in the value of their homes. In all likelihood you will not be allowed to purchase back your home, and even if you could, you’d probably be expected to pay its current market value at that future juncture, effectively turning the equity release scheme into a financially crippling pawning exercise.
But what if you don’t have any other option?
If financial circumstances or the onset of old age are forcing you to consider taking a loan against your own home equity, we’ve got some good news: there are alternatives to home reversion!
MPG proudly offers quick home sale solutions that release your home equity in hard cash. Additionally, our Sell and Rent Back solution gives you the option to stay in your home by renting it from us on a long or short-terms basis – at a rate that is market-related or even more affordable!
Contact one of our expert home buying consultants on
0800 634 9231 to find out more about our services. Our advice will help you make a sound financial decision about home reversion, so put us to the test today.
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