How Home Reversions can make up the difference needed to move to the house you really want
The assumption is often made that when people reach retirement age, if they are to move home it will be to downsize to a smaller and typically lower value property. For many homeowners in later life moving home is a lifestyle choice, for example moving nearer to relatives or to a bungalow near the sea. Often this involves moving to a more expensive property. Many potential customers would like to make this lifestyle change but do not have sufficient capital to make the “trade up”.
For these clients taking out a home reversion simultaneous with purchasing a new property could be the answer.
Let’s take the example of a 70 year old male who owns a 3 bed roomed semi detached house in the Gosforth area of Newcastle worth £180,000 who for this example we’ll call the client Ron Smith. The house was a good family home as it was close to the children’s school and local amenities and offered an easy commute into work. Now that the children have left home, Ron has retired, with more time to indulge his love of gardening and long walks by the sea. He would like to move to a detached bungalow in Tynemouth with a large garden, on the market for £340,000.
Mr Smith does not have the money to fund the £160,000 shortfall between the sale price of his current home and the bungalow in Tynemouth. In addition to the shortfall he needs an additional £4,000 to put towards moving costs, so a total of £164,000 is required.
If Ron took out a 100% reversion on the new property worth £340,000 he could release £164,000 at completion, this combined with the sale proceeds from his current home would enable him to purchase his dream home and leave £4,000 to help with moving costs.
Naturally if Ron decided to move to a slightly less expensive property he would retain an element of equity which would guarantee an inheritance for his estate.
This is a great solution which many estate agents don’t know about – ask for an example before you go looking.