What’s the difference between a home reversion plan and a lifetime mortgage?
A lifetime mortgage and a home reversion plan are both types of equity release products available to homeowners aged 55 or over in the UK, but they work in very different ways.
Lifetime Mortgage
Ownership: You retain full ownership of your home.
Loan Type: You take out a loan secured against your home.
Repayment: The loan (plus interest) is usually repaid when you die or move into long-term care.
Interest: Interest can be rolled up (compounded), meaning the debt grows over time unless you choose to make repayments.
Flexibility: Some plans allow drawdown (taking money in stages), voluntary repayments, or interest-only payments.
Inheritance: Reduces the value of your estate, but you may be able to protect a portion of it.
Home Reversion Plan
Ownership: You sell part or all of your home to a reversion company.
Payment: You receive a lump sum or regular income, but below market value (because the provider waits to benefit until the property is sold).
Tenure: You can live rent-free in the property for the rest of your life.
Repayment: No repayment required, but the provider gets their share of the sale proceeds when the property is sold.
Inheritance: You can guarantee a portion of your home remains for inheritance if you only sell part of it.
