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An Introduction to Reversion Plans Peter Couch Managing Director Bridgewater Equity Release

An Introduction to Reversion Plans Peter Couch Managing Director Bridgewater Equity Release. Definition of a Reversion plan. Under a home reversion plan a homeowner sells part or all of the home in return for a lump sum or income and the right

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An Introduction to Reversion Plans Peter Couch Managing Director Bridgewater Equity Release

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  1. An Introduction to Reversion Plans Peter Couch Managing Director Bridgewater Equity Release

  2. Definition of a Reversion plan Under a home reversion plan a homeowner sells part or all of the home in return for a lump sum or income and the right to remain in the house until they die or move into care. The lump sum or income depends on a number of factors including the age of the owners and the value of the property. When the former owner dies or moves into care the reversion provider can sell the property. Source – Defining Home Reversions (HM Treasury consultation document, July 2004)

  3. Fundamental Differences • Reversion • Provides the client with certainty of legacy • A higher cash release is available • Greater certainty of future releases • Lifetime Mortgage • The client retains both the risk and reward of HPI and Mortality

  4. Key Risks ReversionLifetime Mortgage If client lives longer than assumed Provider Customer If HPI is low Provider Customer (NNEG) Guaranteed legacy Provider Customer

  5. When would a Reversion be more appropriate? • Guaranteed legacy • Release maximum cash / income • Same cash as a Lifetime Mortgage but with the certainty of a legacy / further releases

  6. Fundamental need to understand your client’s attitude to risk

  7. An HPI scenario

  8. Comparisons Male, 70 yo, life expectancy 16 years, initial property value £250,000, 50% reversion, £62,000 released. LTM interest of 6.95% assumed.

  9. Comparisons Female, 75 yo, life expectancy 14 years, initial property value £250,000, 50% reversion, £65,000 released. LTM interest of 6.95% assumed.

  10. Comparisons Joint lives, both 70 yo, life expectancy 22 years, initial property value £250,000, 50% reversion, £50,000 released. LTM interest of 6.95% assumed.

  11. Comparisons Joint lives, both 75 yo, life expectancy 17 years, initial property value £250,000, 50% reversion, £59,000 released. LTM interest of 6.95% assumed.

  12. Maximum cash release

  13. SHIP Reversion Providers • Bridgewater Equity Release • GE Life • Hodge Equity Release • Home & Capital Trust • Key Retirement Solutions • Norwich Union

  14. Regulation • Now • MCOB 8 – Lifetime Mortgages • Reversions must be considered • SHIP Reversion Code of Conduct

  15. Regulation • Future • Queen’s speech • Reversion regulation in 18 months

  16. Questions?

  17. Contacts Bridgewater Equity Release 0808 100 1065 Peter Couch Managing Director 07962 021949 Andrew Dixon Marketing & Sales Manager 07917 531364 www.bridgewaterequityrelease.co.uk

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