At Homewise we know that for many, leaving an inheritance for your loved ones is important.
The Home for Life Plan is designed to meet your personal needs, so whether you want to leave an inheritance to your estate, gift your loved ones with funds now, or both, this is built into your plan from the beginning.
All three of the above options will change the way that your Home for Life Plan is created, so let’s take a look at how they could work for you.
Background
Let’s imagine you’re a couple, both aged 70. You want to live closer to your son and be able to provide him with an inheritance.
You’ve sold your current property, paid off all previous debts, and have around £300,000 to fund your onward purchase. This could be stretched if you use your savings and perhaps borrow extra funds.
Great news, you’ve seen the perfect property in the ideal location, but, in today’s market, it’s being advertised for sale at £350,000.
To secure this as your new home, you could…
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purchase a Home for Life Plan to live in the property and safeguard a guaranteed monetary inheritance for the future
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purchase a Home for Life Plan to live in the property and gift an early monetary inheritance now
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purchase a Home for Life Plan to live in the property and secure guaranteed funds payable in the future and gift financial support now, should you wish
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use your savings and buy the property for £350,000, and be able to leave this property to your son in the future
Let’s explore how some different safeguarding options could work with the Home for Life Plan.
Safeguarding an inheritance for the future
You may want to safeguard the maximum amount for your estate, namely 50% of the property’s future resale value.
In this scenario, Homewise would buy the property valued at £350,000 and you would pay a one-off amount of £296,625 for the Home for Life Plan to live there. Essentially Homewise has boosted your affordability by £53,375, and you have an extra £3,375 left in your budget to top up your savings pot with!
You live happily and securely in your home, rent-free and mortgage-free for 20+ years, and the plan comes to an end when you have both either passed away or moved into full-time care.
The property is valued and, in this future market, may be sold for £765,000*. Your estate would be paid 50% of the resale value, less the share (50% in this example) of the standard selling fees. That would mean your estate inherits £382,500 (minus selling fees).
Gifting an early inheritance
You may wish to benefit from the maximum boost available now, meaning you pay less for the Home for Life Plan and are able to live in the ideal home of you’ve chosen for your lifetime.
Homewise would buy the property for £350,000 and you would pay only £243,250 for the Home for Life Plan – that’s a boost of £106,750! With 0% safeguarded for your estate.
As you won’t have used the whole of your available budget to buy the Home for Life Plan, you could gift your son the saved £56,750 straight away as an early inheritance, or top up your savings pot for the future, or both, as you wish.
Gifting an early inheritance and safeguarding an inheritance for the future
You can safeguard anywhere from 0% - 50% of the property’s future value, so how does it work if you want to gift your son with something now and in the future?
Homewise would buy the property at the full market value of £350,000 and, having decided to safeguard 20%, you would pay £264,400 for the Home for Life Plan.
With £35,600 left in your budget, you can provide a monetary inheritance to your son now and when the property is sold in the future too.
20 years pass and the Home for Life Plan ends. This property may then be sold for £765,000* and 20% would be paid to your estate – that would be £153,000 (minus selling fees).
Every person we help is different, with their own set of unique circumstances and wishes, and that’s why every Home for Life Plan is unique and tailored to your needs. Whether you wish to downsize, upsize, relocate closer to loved ones, clear outstanding debts, provide an inheritance, or simply enjoy peace of mind in a home you love, Homewise can help.
Could a Home for Life Plan be the perfect solution to enable you to secure your dream home? Try our quick calculator to find out instantly how you could benefit from a Home for Life Plan.
*Property resale value calculated at 4% growth over 20 years – according to UK House Price Index, the average annual rise in house price between 2017-2021 is 4.41%. Correct as of March 2021. Standard selling fees would be calculated according to the amount safeguarded, for example, 50% safeguarded would result in paying 50% of the selling fees.