Selling your home (or part of it)
With a reversion scheme, you agree to sell all or part of your property for an agreed amount. You can receive this as a lump sum, an income or both. The money you get will not reflect the full market value at the time you take out the scheme. This is because the reversion company will not get its money back until you die or move into a care home or another property. Usually, you will get between 20% and 50% of its current market value, depending on your age (and your partner's).
When you die, the percentage of your home that you sold belongs to the reversion company. If you sold your entire home to the company, it will own your home outright, including any increase in its value since you agreed to sell it. If you sold only a percentage of your home to the company, the rest will pass to your estate. Some schemes offer a rebate for your family if you die within the first few years of signing up to a home reversion scheme.
Here are two examples.
Your home is worth £100,000. You agree to sell your property entirely to the reversion company for half its current value. You receive £50,000 now, and you can live in the property for the rest of your life. You will not owe the reversion company anything. When you die, the reversion company own your home, whatever it is worth.
Your home is worth £100,000. You agree to sell half your property to the reversion company for half its current value. You receive £25,000 now. When you die, the reversion company owns half the house, and the other half will pass to your estate. So if the house is sold for £150,000, £75,000 will go to the reversion company and £75,000 will go to your estate.