Home Income Plan

Introduction

A home income plan combines equity release with an annuity to provide you with a steady, lifelong income. By releasing equity through a lifetime mortgage or a home reversion plan, the funds are invested directly into an annuity, which guarantees regular income payments for as long as you live.

In some cases, you might also receive a restricted cash lump sum alongside the income. The exact amount depends on factors like annuity rates, your age, and your gender.

The Advantages

• Lifetime income security: A lifetime annuity ensures you receive income for as long as you live.
• Flexible payment options: Choose between a fixed income or one that increases annually to keep pace with inflation.
• Higher income potential: Annuities tied to home income plans often pay more than standalone annuities.
• Lump sum option: You may also receive a cash lump sum in addition to your regular income.
• Age advantages: The older you are when the plan starts, the higher the income you’ll typically receive.
• Minimised home value impact: Since the loan interest is repaid automatically, the reduction in your home’s value is kept to a minimum.

The Considerations

• Locked into an annuity: Once the annuity is set, you’re committed to this method of income generation, limiting flexibility.
• Risk of early death: Without added protection, you may lose out if you pass away shortly after setting up the plan.
• Limited financial improvement: As the interest is repaid immediately, the remaining annuity income might not significantly boost your finances.
• Cost concerns: Borrowing against your home may cost more over time compared to downsizing to a smaller property.
• Benefit impact: Home income plans could affect your eligibility for state benefits or grants.

Making the Right Choice

A home income plan offers a structured way to secure a lifelong income while using the equity in your home. However, it’s not for everyone. The key is understanding the balance between the benefits of a guaranteed income and the potential limitations of an annuity-based plan.

Our experienced advisers are here to help you navigate the details, assess your needs, and determine whether this is the right solution for you.

Let’s talk about how a home income plan could support your financial future.