An easy answer to how much you gain get as a maximum release using a home reversion calculator is 100%. But in actuality the answer is more complicated. Home reversion by definition in the financial industry is a sale of your home in full or part. If you sell your home in full to a company you are selling 100% of your home, thus you get the maximum amount a home reversion company is willing to give you. At any age, 65 or over, you can sell 100% of your home to the company. The explanation is still not complete as there are many factors that will determine the maximum release amount.
When you purchased your home, you most likely obtained an appraisal to tell you if the purchase price fell in line with the value of your home on the market. This number was used to determine if a mortgage was possible to help you buy this home, unless you had enough to purchase in cash. So you should already be aware that housing value has a definite influence on potential resale value and the amount of equity in your home.
You also know that property can appreciate or depreciate based on economic factors. During an appreciation period it is a great time to sell because your home is worth more and therefore you can get more in the sale.
The youngest homeowner has to be age 65 in order to qualify for home reversion. The other person such as a spouse can be older, as long as all homeowners on the property title are 65 or older. Age factors into the equity release calculation based on mortality tables. These tables indicate the potential life expectancy of a home owner. Someone older is not expected to have as many years left as a younger individual.
You get a lot for selling your home. You get to live in that home until your death or the death of the youngest person named in the agreement. You could also move out at which time the home has to be sold to the company and you would get the unsold portion in a tax free lump sum. While you live in the home you do not pay rent. You have a lifetime tenancy agreement and equity release scheme that requires you to keep the home in good condition so that it will not depreciate on the home reversion company.
In return for living rent free, without needing to repay any of the funds you receive, and tax free cash, the home reversion company has to wait. They have to wait until you die or decide to leave the home. Only when you have left the home and gained a new main residence can the company gain on their investment.
The investment is to give you a certain percentage of the total home value based on the amount of home you sell. Remember you can sell 100% of the home and get the maximum release amount, but this is not the same as 100% of the home value.
The company has to gain in this situation. If you live in the home for 30 more years the company has given you cash they are not making anything on. They are waiting to sell the entire home at full value, which has hopefully increased due to appreciation. To cover depreciation they provide a percentage that is under 100% of the home value.
The home reversion calculator comes in by giving you a guide to a number. The calculator gives you a possible percentage of actual funds you get to take out in equity based on how much of the home you want to sell and your age.
Crown is one company offering home reversion. This company is known for their flexible underwriting culture meaning they consider schemes like an enhanced home reversion in which they might be willing to give a higher percentage of tax free cash to you. If you have ill health crown may be willing to seek out a personal investor in their plethora of investors willing to provide more money in a home reversion.
As the home reversion calculator is just a guide, you also want to make certain you are dealing with an experienced and qualified equity release adviser able to make you a deal. You can find such a person through a reputable company like Compare Equity Release.Back