Reverse mortgage & home reversion

Home reversion, unlike a reverse mortgage, is not a loan but the sale of a proportion of a person’s equity in their home.

Equity release products such as these require that independent legal advice be obtained.  Your client and their family members may have been given the impression by a lender that the advice can be obtained in a few minutes. You need to ensure your client is informed and understands the complexity, pitfalls and future effects of these arrangements. What will it cost them? How will it affect their current and future finances and their retirement lifestyle?

See the Legal Practitioners’ Liability Committee Bulletins on equity release products.

You also need to ensure your client is entering into such arrangements without influence or external pressure. Interview your client on their own and keep thorough records of the advice you have given and the instructions received. (See Ensure your client has the capacity to make the decision.)

The assessment of your client’s assets for an accommodation bond may be affected by any lump sum received and how they use it.

You may need to refer your client for specialist advice to a financial advisor, an Elder Law specialist, or to the National Information Centre on Retirement Investments (NICRI). See Financial services in Resources.