[Continued from What Everyone Needs To Know About Reverse Mortgages - Part 1]
Some points to consider (contd)
You should also bear in mind that a reverse mortgage might make it more difficult for you to relocate, since you will need to pay off the loan when you sell your house. In those circumstances, you may find that the remaining equity is not sufficient to finance the purchase of another property.
Home reversion plans
A home reversion plan is similar to a reverse mortgage in that it enables a retired person to swap home equity for cash or income. The way that a home reversion plan works is, however, very different to a reverse mortgage.
With a home reversion plan, you actually sell your property in exchange for: (i) a sum or money - which might be paid out in instalments or in a lump sum that you can invest or use to purchase an annuity; together with (ii) the right to continue to live in the house for the rest your life.
Since a home reversion plan involves the outright sale of your home, it is a major step - and you should get independent professional advice before taking it.
Avoiding scams and mis-selling
Many pensioners and retired people will have spent years accumulating equity in their homes. Before agreeing to a scheme to give up all or part of that equity, you should be thoroughly familiar with the details of the transaction, and have a good understanding of its advantages and disadvantages.
A solicitor can help you ensure that the scheme you're thinking about is right for you, and make any adjustments to your will or other estate planning that may be required as a consequence of the equity release scheme.
Finding a solicitor who can help you with a reverse mortgage
You may already have used a solicitor for estate planning or other matters. If not, there are a number of ways you can find a solicitor in your area who will have the skills and experience needed to assist you in planning and carrying out a home equity release arrangement. Some possible ways of finding the right solicitor are doing some online research, checking with the Law Society, or using a free referral service like Contact Law.