For the 60+ homeowner, a home reversion plan can be the perfect solution for securing the money they need to do the things that they want to do. What is a home reversion plan? Does the homeowner need to repay the borrowed money?
For homeowners who have reached the age of 60, using home reversion plans to access home equity is an affordable option that can ease financial strain. This type of plan involves a process in which the homeowner trades a portion of the equity in his home to a reversion company in exchange for a sum of cash. The homeowner determines how much of the home equity he wishes to trade to the reversion provider. It is possible to trade a portion of the home’s equity or the entire amount.
The homeowner may also determine whether he wants to receive all of the money at once or in monthly installments. Some homeowners opt to receive all of the money in order to maintain control of the funds. The money can be placed into a bank savings account, checking account, savings bonds, or CDs. It can be invested in stocks or simply placed into a safety deposit box until needed.
For those homeowners who have difficulty managing their finances, the option to receive monthly installments is generally a better one. With monthly installments, the homeowner can receive enough money to cover his monthly expenses, allowing him to live a stress free existence, while still having enough money to use throughout the remainder of his life.
Interest is not charged with a home reversion plan. The homeowner never needs to repay the money to the reversion lender until the home is sold. In the event that the homeowner decides to sell the property and move into a retirement facility, the money is repaid at that time. If the homeowner dies, the individual who inherits the property is responsible for repaying the lender for the amount of money that was borrowed through the home reversion plan.