If a homeowner takes out a home reversion plan on 100% of the property, which statement is true?

If a homeowner takes out a home reversion plan on 100% of the property, which statement is true?

• A. The planholder will retain ownership of the property
• B. The planholder can choose to receive cash or income, but not both
• C. The planholder will not benefit financially from any improvements made to the property
• D. Interest will be rolled up but the debt cannot exceed the value of the property

Answer: (C)

With a home reversion plan, you sell all (100%) of your property to the plan provider in exchange for cash or an income, while you may still have the right to live there for life. The crucial point is ownership. If you surrender the entire title, you no longer own the home and therefore don’t share in any increase in its value from improvements. Any improvements become part of the provider’s asset base, not yours, so you don’t financially benefit from those enhancements. The other statements don’t fit because: - You would not retain ownership if the plan covers 100% of the property. - You can usually choose cash, income, or a combination in many reversion products; the notion that you can’t have both isn’t universally true. - The concept of interest being rolled up and a no-negative-equity cap applies to lifetime mortgages, not to a 100% home reversion.

With a home reversion plan, you sell all (100%) of your property to the plan provider in exchange for cash or an income, while you may still have the right to live there for life. The crucial point is ownership. If you surrender the entire title, you no longer own the home and therefore don’t share in any increase in its value from improvements. Any improvements become part of the provider’s asset base, not yours, so you don’t financially benefit from those enhancements.

The other statements don’t fit because:

• You would not retain ownership if the plan covers 100% of the property.

• You can usually choose cash, income, or a combination in many reversion products; the notion that you can’t have both isn’t universally true.

• The concept of interest being rolled up and a no-negative-equity cap applies to lifetime mortgages, not to a 100% home reversion.