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.

Table comparing features of Lifetime Mortgage and Home Reversion Plan, including ownership, payment received, repayment, interest, inheritance impact, and age requirement.