Home Reversion Calculator

Thinking about using a home reversion calculator, but not sure if you need a professional valuation or assessment? It's possible you might not even need a home reversion calculator at all.

These Equity Release plans involve selling a percentage of your property to a reversion provider in exchange for a tax-free lump sum and lifetime tenancy. But before you go ahead, it's important to understand the potential drawbacks and why a calculator might not give you an accurate estimate.

In this insight, we'll explore the risks of using a home reversion calculator and why seeking professional advice may be the best option for you.

Key Takeaways:

• A home reversion plan involves selling a percentage of your property to a reversion provider in exchange for a tax-free lump sum and lifetime tenancy.
• Online home reversion calculators provide a general idea of how much you could release, but for an accurate assessment, you need to consult an Equity Release Adviser.
• A home reversion calculator considers several factors to determine the amount of money you can release, including the value of your property, the age of the youngest homeowner, your postcode, and the percentage of your home's equity you want to release (up to 100%).
• A lifetime mortgage may be a better option than a home reversion plan because it allows you to borrow against your property's value without selling it, and you can repay the loan when you die or move out, keeping ownership of your home.

If you're a homeowner over the age of 60 and searching for a way to access the cash tied up in your property, you may have heard of a "home reversion plan". Simply put, a home reversion plan is an equity release plan that involves selling part or all of your property to a provider in exchange for a lump sum or regular payments. You can continue living in your home rent-free until you pass away or move into long-term care. At that point, the provider will sell the property to recoup their investment.

What is a Home Reversion Calculator?

A home reversion plan calculator is a tool that estimates the equity you could release from your property with a home reversion plan. But, it's crucial to understand that there isn't really a "home reversion plan calculator". Although some providers may offer online calculators, these are only meant to provide a general idea of how much you could release. To get an accurate assessment of your property, you'll need to consult an Equity Release Adviser.

How does a Home Reversion Calculator calculate what you can release?

Calculating how much you equity you can get with a home reversion calculator requires consideration of several factors. Home reversion providers typically use specific criteria to determine the amount of money you can release, including the value of your property, the age of the youngest homeowner, your postcode, the percentage of your home’s equity you want to release (up to 100%), and whether you are applying alone or in joint names.

The value of your property is a critical factor in determining how much you can release with a home reversion plan. Your property must have a minimum value of £50,000 and be located in the UK. The property's value determines the percentage of the property that you can sell to the reversion provider.

The age of the youngest homeowner is also crucial in determining how much you can release with a home reversion plan. You must be at least 60 years old to be eligible for a home reversion plan. The younger you are, the less money you can release.

Your postcode is another factor that the home reversion provider considers when calculating how much money you can release. The postcode determines the local property market, and the provider will assess the potential resale value of the property in the future.

The percentage of your home’s equity you want to release is another crucial factor that determines the amount of money you can access with a home reversion plan. You can release up to 100% of your property’s equity with a home reversion plan, but this means you will sell the entire property to the reversion provider. It is essential to consider the long-term implications of releasing all of your equity.

Lastly, the home reversion provider will consider whether you are applying alone or in joint names. If you apply in joint names, the provider will consider the age of the youngest homeowner to determine the amount of money you can release.

What to be aware of when using a Home Reversion Calculator

Using a home reversion calculator to estimate how much money you could release from your home may seem straightforward, but it's important to consider the downsides of relying solely on a calculator to make decisions about your financial future. 

One significant issue is that calculators only provide estimates based on certain assumptions that may not take into account all of the unique factors that could affect the value of your property or the amount of money you could release. Additionally, many calculators may not be up-to-date or accurate in their calculations, which could lead to unexpected outcomes or a false sense of security. 

Finally, a calculator may not consider the full range of options available to you, such as accessing more money through a lifetime mortgage or other equity release product or exploring alternative ways to finance your retirement.

The Downfalls of Home Reversion Plans

Before getting a home reversion plan, it's important to know that there are some drawbacks to consider. First, you are giving up ownership of part of your property, so you won't benefit from any future increases in value. Second, the plan can be inflexible, making it difficult to change the agreement. Lastly, it can be expensive, as you may receive a lump sum that's much lower than the actual value of the property you're selling

Considering a Lifetime Mortgage Instead

If you want to access money from your home without giving it up, a lifetime mortgage may be a better choice. It allows you to borrow against your property's value without selling it. You can get a lump sum or regular payments, keep ownership of your home, and repay the loan when you die or move out. Your family will get any remaining equity. Lifetime mortgages are also flexible, letting you repay the loan without penalty and move home with the loan (if approved).

Using a Lifetime Mortgage Calculator

If you're interested in considering a lifetime mortgage as an alternative to a home reversion plan, you may want to use a lifetime mortgage calculator. This is a tool that allows you to estimate how much equity you could release from your property and how much it would cost you.

A lifetime mortgage calculator takes into account your age, the value of your property, and the percentage of equity you wish to release. It can give you a rough idea of how much you could release.

However, like with a home reversion plan calculator, it's important to note that this is only a rough estimate. To get an accurate valuation and assessment of your property, you will need to speak to an equity release adviser to find out exactly how much equity you can release.

We have put together an Equity Release Calculator which roughly calculates how much equity it would be possible to release on a lifetime mortgage.

Next Steps of Equity Release

If you are considering equity release, it is important to speak to an Equity Release adviser who can help you understand your options and guide you towards the best product for your circumstances. While online calculators may be helpful as a starting point, they are not a substitute for professional advice.

As a home reversion calculator may not actually exist, If you're unsure how to get started with equity release advice, complete the Sunny Fact Find. The answers you provide help us to find the best-suited adviser for your needs. Your adviser then contacts you to discuss your needs and can provide their own home reversion calculator based on their current lenders. You decide how to proceed.