These Equity Release schemes are where you sell all or part of your home in return for a cash lump sum which can be used for any purpose you wish. Once you have completed the Equity Release you will have the right to stay in your home rent free until you die or you move into care and you don't need to make any monthly repayments.
This type of Equity Release schemes was very popular until Lifetime mortgage Equity release schemes were introduced, but now only make up approximately 5% of the equity release market. They can be useful where people want to make sure that they leave some capital to their family as only part of the house needs to be sold to the Equity Release company. Once the applicants die or move into care the Equity Release company would sell the property to recover their share and the balance of the value of the property would then be passed onto the beneficiaries on death.
This type of Equity Release scheme can be useful for older people who want to release as much money from their house as possible as they can provide more than Lifetime mortgages in most cases. However, this type of Equity Release scheme is generally more likely to be suitable for those with higher property values who do not need the maxiumum amount available and may wish to leave money to family and friends.
Both Reversion and Lifetime mortgage Equity Release schemes can be used for inheritance tax planning. However, great care is needed when considering this option as the long term costs can often out weigh the potential tax savings.