This new product will complement the company’s lifetime mortgage product.
Home reversion plans enable older homeowners to raise cash from their home by selling all, or a share, of their property. As with a lifetime mortgage, the customer can remain in their home and there are no repayments to make. Home reversion plans could appeal to customers who need more cash than is available to them with a lifetime mortgage, or who want to guarantee a share of the property remains when the plan ends, and can be left as an inheritance.
The plan has been developed through a partnership with Grainger Trust plc, the UK’s largest quoted residential property investor, and has been designed to:
- Allow customers to release more cash from their home than through a lifetime mortgage
- Provide an Inheritance Protection Guarantee - designed to protect the value of the customer’s estate in the event of the plan ending through death in the plan’s first four years. The guarantee will also apply if the customer requires long-term care in the first four years
- Provide a House Price Inflation Guarantee - a guarantee that the customer will still benefit from high rises in the value of their property
- Allow customers to sell up to 100% of the value of their home, and remain living there for the rest of their life. Alternatively, the customer can sell a proportion of their home and ensure that a share of the property remains within their estate
The Norwich Union Home Reversion Plan will be sold only on a fully-advised basis through FSA-regulated IFAs and mortgage intermediaries, and directly to consumers through Norwich Union’s fully-regulated financial consultants.
Home reversion plans are not regulated by the FSA under mortgage regulation introduced in 2004. However, the Treasury has announced that these will be regulated in the future, which Norwich Union supports. The Norwich Union Home Reversion Plan has been developed to comply with the Safe Home Income Plans (SHIP) voluntary code of conduct for home reversion plans.
Mark Kelly, director of Norwich Union Personal Finance, said: “Launching this plan is an important development in the equity release market as there has not been a major product provider in the reversion market for several years.
“Our research shows that some customers find a reversion plan to be a simpler proposition that might be more suitable for their needs than a lifetime mortgage. This is particularly the case if customers want to guarantee an inheritance, or need to release a larger amount of cash. To give customers reassurance we have also built in an Inheritance Protection Guarantee and a House Price Inflation Guarantee.
“This new plan follows the SHIP code of conduct for reversion schemes and we fully support the commitment from the FSA to regulate home reversion plans.”
