Home improvements: could equity release help?

19 July 2022

8 min read

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There’s no doubt that home improvements could add value to your home. However, for some people in their 50s, funding these improvements can sometimes seem like an impossible dream.

There are a number of ways you might be wishing to transform your home. Whether you want to expand your space, upgrade your appliances or even try to increase the value of your property, making improvements to your treasured space can make life more comfortable in a whole host of ways.

How to fund home improvements in later life

As you enter or approach your leisure years, you’ll likely be having thoughts and conversations about how best to budget for all of your goals.

From loans to cash savings, you have options when deciding how best to fund your desired changes, but have you considered how it might pay to use the value you already hold within your home for your improvements?

Many homeowners decide to downsize and move to a smaller property to free up equity. Whilst downsizing is a popular way to raise funds later in life, moving on is of little use when your main aim is to make the home you love even better.

Alternatively, releasing equity could offer a solution. There are two types of equity release product, a Lifetime Mortgage and a home reversion plan. A Lifetime Mortgage is the most popular option, as with this, you retain full homeownership. It allows you to release a tax-free cash sum from the value of your home which you can spend on home improvements. There are other options to release equity such as Retirement Interest-Only Mortgages and traditional mortgages which may be better for you depending on your individual circumstances.

How equity release can help

If you are a UK homeowner aged 55 or above and your property is worth more than £70,000, you are likely to be eligible to release equity to fund your home improvements. You must want to release at least £10,000, so a Lifetime Mortgage might give you scope to make some big changes such as relandscaping your garden, modernising your kitchen or adding a conservatory.

Unlike standard mortgages, Lifetime Mortgage products have no fixed end date or required repayments. You must be able to clear any existing mortgage on the property upon completion of your Lifetime Mortgage, either using the equity released or additional funds.

You can choose to make voluntary payments towards the amount borrowed, or simply let the interest roll up at which point the total balance will only be due when the last homeowner has died or moved into long-term care.

Consider your options

There are both benefits and drawbacks to consider when deciding if releasing equity is the best way to fund your home improvements.

You will retain full homeownership and can have flexibility about how and when you access the cash available to you, but you must also think about the fact that taking from your estate now will reduce its value in the future and may also affect your entitlement to means-tested benefits.

Deciding which option is best for you can therefore be a difficult choice, so the best thing you can do is seek professional advice to find out if equity release is right for you.

Here at Royal London, we have carefully selected the experts at Responsible Life to provide our Later Life Lending Service. They are ready to offer each of our customers access to quality advice that covers all of the products available to over-55s looking to raise funds to improve their homes.

Want to find out how much equity you can release from your home?

Use the free equity release calculator today to find out how much you could be eligible to release.

Use the equity release calculator Use the equity release calculator