Pensioner poverty may not be obvious now; however, sooner than later it will become a reality for retirees trying to make ends meet. Personal pensions have been reducing gradually in the past few years, while the state has insufficient income to fill the widening gap. What makes it worse is the fact that people are living longer these days due to better healthcare, but the good news is that one can find help if they own a home through equity release. A home reversion plan can benefit you in a number of ways from home improvements to added income to live on after your retirement.
If you are wondering how you can improve your home and make it more retirement friendly, you may want to consider a home reversion plan to assist in your quest for a more meaningful retirement.
You will find different reversion mortgages that offer a number of options to supplement one’s current income. You can get this money as a lump sum, which you can use to renovate your home, make it more comfortable, and even increase its resale value. This is very helpful in the long term in case you need to release more equity out of it in future; for instance, to finance long term care.
Equity release may not be the best option for everyone, and it is just one among many retirement and home improvement funding options. You may want to consider the following points before you take up a home reversion plan:
• The first thing that you will need to consider is other alternatives available for home improvement. For instance, you may choose to downsize, seek grants available to retirees for home improvement, or use savings among other choices.
• If you are receiving council tax benefits, pension credits or other means tested benefits, remember that they might affect how you release equity from your home.
• Consider how the equity release will impact your taxes.
• Consider your family and other beneficiaries or heirs, in which case you might want to consult a legal adviser.
• Consider your own health and life expectancy as these will affect the overall value of the home. Along with this, consider your will and estate plans before you plunge into a home reversion plan.
If you have considered the above points and still want to go ahead with the plan, consult a home reversion plan adviser. Ultimately, the plan will offer you sufficient funds to renovate your home, make it more comfortable, and increase its resale value.
The benefits of a home reversion plan are rather clear. Even if your eye is not on renovating your home but supplementing your income there are definite reasons to consider using your home. As with any scheme to provide you with additional funds, there are disadvantages. Before you use your equity to improve your home for later in life consider what it means to sell part of or your entire home.
A person not yet at retirement age could continue to work and increase their pension plan, gain funds for home improvement, and save up for eventual assisted living needs. Taking money out in an equity plan lowers the funding you have later. You could improve your home by working a little longer and increase the equity you hold for those later years.
Under the reversion plan you actually sell a part of your home. The amount you sell is based on the lump sum or monthly cash instalment you require under the scheme’s limitations. This plan is not a loan, which is how it differs from lifetime mortgages. When you are ready to move or die, the remaining portion of your home is sold. This portion is all that is left for inheritance. The other option is for you to buy back the portion of home sold in order to keep the home for future generations. The home reversion provider has to be willing to allow this purchase, which is not always the case.
After assessing the advantages and disadvantages of the home reversion plan, you must decide if it is a feasible answer to your current home improvement needs. Improving your home and making it livable for later in life can add to the value in the current economy. At the time of your demise or need to sell, the value can once again change making the improvements less valuable. These negatives do not mean the plan is unhelpful at all; you just need to understand what works best for you and your situation then pick the plan that suits you.