Generally these involve selling all or part of your property to a home reversion plan company in return for a lump sum that can be spent or invested as you please. With the equity release home reversion plan, although you are selling part of your house, you retain the right to live in it for life.

Because the reversion company will not receive any money back until both you and your spouse have died (and, hopefully, that will be many years away), the amount you get is less than the full market value and is dependent upon various factors, such as your age, health, gender and so on. So if you have a long life expectancy (relatively young, non-smoker, active, etc), companies are likely to offer less – maybe as little as 35% of the value of the portion of their homes they are selling. In this case, the example would be: with a home valued at £200k and the couple (with a long life expectancy) being willing to sell 50% (£100k market value) and the reversion company on willing to pay 35%, the couple would get £35k.

When you die, the portion of the property you sold reverts to the company with the rest going to your heirs. For example, if you agree to ‘sell’ 50% of your property to the company, it will own 50% of the value of the property when it is sold. This means they will benefit from any increase in value.

Although it might seem slightly ‘distasteful’, the commercial calculation is based around the life expectancy of you and your spouse as much as the prospects for your property to increase in value.