Schemes like these entitle you to borrow money against the value of your home (lifetime mortgage) or sell part of your home at a reduced market rate, but you can continue living there (a home reversion scheme).

 

For Estate Planning, you can gift the money you release on to an heir and the 7-year rule can apply or you can keep the money. When you pass away the estate can be reduced with either the mortgage debt or the part value of your home.

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LifeTime Mortgage

 

Lifetime mortgages vary from lender to lender. However, useful information to know is that there is a minimum age you can apply, usually 55. There is a maximum percentage you can borrow, approximately 60% of the value of your property. Interest rates are fixed or a "capped" variable rate. The downside is that interest rates on the lifetime mortgage are ‘rolled up’ and you can end up paying a lot more than your estate would have paid in tax.

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Home Reversion

 

Home reversion allows you to sell part of your home (between 20% - 60%) to a provider. Again, here is some useful information to remember. You must be over 60 before you can apply. The percentage market value of your home will increase with age. Home reversion allows you to remain in your home for your life time or until long-term care. A point to consider is that you could be selling part of your home for less than its full value.

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