Partial reversion plans are for those customers who want to release less than the maximum amount available from their property. As part of its partial reversion sales process, Bridgewater asks its customers to outline all the potential uses they have for their released equity.
Using compiled data from Bridgewater partial reversion sales over the last 12 months, the top reasons given were:
1. For home improvement – 43%.
2. Repaying a mortgage – 25%.
3. To fund travelling – 21%.
4. Buying a car – 15%.
5. To pay for the plan set-up costs – 15%.
6. To provide a gift – 13%.
7. To have an emergency fund – 6%.
8. To ensure additional income and maintain their lifestyle – 6%.
9. To purchase a holiday home – 4%.
10. Debt consolidation – 4%.
Other customers also intended to use their released cash for such reasons as funding a divorce, buying a boat, settling funeral costs, buying a motorised wheelchair and purchasing an annuity.
Bridgewater’s partial reversion product is called the Flexible Release Plan; the minimum amount that a customer can release with the Plan is either the lower of £25k or the amount released by selling 25% of the property’s value.
Peter Welch, Head of Sales and Distribution at Bridgewater Equity Release, commented:
“There is a school of thought that suggests home reversions should only be used when the client wants to release the maximum amount possible from their property. However, we do not believe reversions are only suitable for this purpose and the growing take-up of our partial reversion product, the Flexible Release Plan, appears to show this mindset is slowly changing.
"Much has been made in recent months of equity release becoming more of a mainstream product and partial reversions, which allow customers to access smaller amounts, are one way that equity release can be applicable to a greater number of individuals and deliver more flexible. At the same time, we know that customers want to maintain an interest in their property and be able to guarantee not just future releases but also a legacy for their estate.
"Partial releases can ensure this and also by releasing smaller amounts the customer will benefit should there be any increases in house prices.
“As can be seen from the reasons given by customers, there are a whole manner of ways customers are using their accessed equity to fund smaller purchases, improvements to their homes or to have funds available should an emergency arise. Flexibility is absolutely key here and this data goes some way to proving that releasing a smaller amount of equity is compatible with funding lifestyle choices.
"Historically, where customers have been looking to release less than the maximum amount, advisers have tended to recommend a lifetime mortgage. However we believe that partial reversions should also be considered fully for this type of customer especially when they continue to provide certainty and security in an economic environment which is not as certain or secure as many would wish it to be.”
