The provider of home reversion plans says it has seen a threefold, year-on-year increase in the number of customers opting to use a reversion to fund a home move.
Bridgewater says it has witnessed a substantial increase in the number of customers who are opting for reversions in order to fund an ‘upsize’.
Bridgewater analysis shows individuals in retirement are increasingly opting to move house for a variety of reasons with the most popular being:
- To move closer to relatives, particularly children/grandchildren.
- To move to a property more expensive than the value of the current home.
- To move to a more attractive area, particularly coastal resorts.
- To move to a higher spec property.
Opting to fund the move via a home reversion rather than through stored up equity in a current property, or cash reserves, offers the homeowner the chance to release more value from the home, the opportunity to have no mortgage-related debt and to be able to live in their new home rent-free for the rest of their lives, or until they have to move into nursing care.
A home reversion plan enables the customer to sell all or part of the value of the home they are moving to in exchange for a tax-free cash lump sum (or regular payments) and a guaranteed lifetime lease.
At the end of the plan the property is sold and the sale proceeds are shared in accordance with proportions owned.
All Bridgewater’s home reversion plans carry the SHIP guarantee and can only be accessed via specialist equity release advisers who have the necessary qualifications and are authorised by the FSA to recommend and advise on such products.
Peter Welch, Head of Sales and Distribution at Bridgewater Equity Release, commented:
“Many people reach retirement and find, for a variety of reasons, that their current property is not suitable anymore or they want to be closer to their children and grandchildren. Others simply want a more manageable property or they wish their last property to be of the very highest standard.
"At this stage in their lives taking out a mortgage of any kind is not desirable and, indeed, probably not available anyway plus there is an unwillingness to eat into any cash reserves that have been built up.
"This is why we are seeing a rise in the number of retired customers who are opting to fund a new purchase through a home reversion plan as it potentially offers the opportunity to release more value from their home, plus there are no credit or affordability checks and it allows them to stay rent-free in the new property for as long as they wish.
“We certainly expect to see greater numbers of retired individuals opting for this method of finance and it is therefore important that estate agents in particular have strong referral relationships with specialist equity release advisers who will be able to ascertain whether an individual is potentially suitable for such an option.
"Equity release is not suitable for all and the process and the customer responsibilities must be clearly explained at the outset by a professionally-qualified individual.
"Having said this, treating one’s property as an asset is becoming less of a taboo in the UK and we believe that the number of people who will be choosing to release equity to fund such moves will only increase in the future.
"Therefore it is important that specialist knowledge and experience is readily available in order to make the transaction happen.”
