A Home Reversion Scheme, also known as a Shared Sale Agreement gives the Senior Homeowner a cash amount today in return for selling an agreed share of the future proceeds from the sale of their home. It is not a loan and there is no interest rate or capitalising interest. The customer remains the legal owner of their home, and their right to remain until the Homeowner chooses to sell, is fully protected.
The cash amount is less than the agreed share sold into the future, as the product provider does not expect to receive its share of the sale proceeds for a long time into the future. However if the Homeowner sells earlier than anticipated then they have the benefit of rebates which will adjust for the actual period of the transaction and increase their own share of the proceeds of sale.
The amount available with a shared sale agreement is based on a number of factors, including the property value today and the age of the Homeowner. No matter what happens the agreed share of future proceeds cannot change, so the Homeowner will always know where they stand with respect to the minimum share of the sale proceeds they will receive.