What is the home for life plan?
The home for life plan is a form of lifetime lease offered by the Homewise company.You pay a one-off fee to live in a property of your choice with no rent, repayments or interest for the rest of your lifetime. It would be your home and you’d be registered as the lifetime owner at Land Registry.
With a home for life plan, you get to choose a home which you want to live in. As an over 60s customer you do not buy the property, Homewise or its investors will purchase the property and you buy the lifetime lease which gives them the legal right to live in that property, rent-free, mortgage-free and without any interest repayments for their lifetime.
With the home for life plan, you will essentially pay a discount which can be up to 59%(depending on your circumstances)of the property value and hence the discount lifetime lease. You will then be able to live in the property rent free until you die or move into long term care.
The amount of discount you will get with the home for life plan is based on your age, gender, marital status, property and financial circumstances.
Income is not a factor – discounts are calculated on a range of factors, but it essentially comes down to age, gender, personal circumstances and property criteria. For example, if you want to live in a leasehold flat the discount available would be less than a freehold flat.
The customer cannot use a mortgage for a Home for Life Plan and so they essentially need to be a cash buyer – most will fund this move through the sale of their current property but that’s not always the case. Income is not a factor in how much discount you receive but it may contribute to your decision if you can afford your retirement or wish to free up more funds (and so find a more affordable property) at this time.
When you die or move into long term care the property is sold and the future property value that were ring fenced is given to your family or estate while homewise keepsthe property.
Note: The over 60s customer does not ‘own’ the property or any ‘shares’ in that property.
They do have the option to protect and safeguard up to 50% of the property’s future value which can be passed on to their estate, but this is not classed as shares or ownership
The pros of the home for life plan
With the Home for Life Plan, you can ring fence up to 50% of the property to pass on as an inheritance to your family.
ThIs means with the home for life plan you will live
With the home for life plan, you are guaranteed a lifetime lease. This guarantee is registered by your solicitors at the land registry.
Another pro of the home for life plan is that it guarantees that you will be able to move homes if you want to. However, you will cover all your own moving costs and so Homewise will always try to help you find a property you can enjoy for life from the start to avoid future moves and stresses for you.
Another advantage of home for life’s plan is that it may allow you to avoid some stamp duty tax liability. Both the customer purchasing the lifetime lease and Homewise purchasing the property must pay stamp duty as with any property purchase, so two lots of stamp duty are paid.
With the home for life plan, you can buy property anywhere in the UK. England and Wales, property laws are different in Scotland and certain areas of the UK such as Jersey for example. This means there may be some limiations.
The home for life plan offers complete security – You pay a one-off price to live in a home they love without any rent, mortgage or interest repayments for their life.
It’s especially beneficial for couples who are over 60 as the other person will remain secure in the home should anything happen to their partner. They won’t have to worry; the plan only ends when all named parties have passed away or moved in to full-time care.
Cons of the home for life plan
It may be difficult to obtain a mortgage for a life lease home.
Customers cannot use a mortgage with a lifetime lease option – they must have the funds available to pay the one-off purchase price at the start of the plan
With the home for life plan, you will not own full or any title of the property.You have purchased a legal right to live there for their life without any rent, mortgage etc.
You will have to be at least 60 years before you can use the home for life plan
The home for life plan will only buy standard construction properties.
Homewise is not regulated by the FCA because they do not provide financial products or services.They are also not required to be. This isn’t a bad thing, it just means there isn’t much regulatory oversight.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.