Can I release equity for a home improvements?
Yes. People who release equity from their homes do so for home improvements such as refurbishments, extensions, or new furniture. You might choose to use the money released to make your home more accessible if you have mobility requirements. For example, by adding ramps, widening doorways, and installing handrails. Equity release can help you achieve these goals and ensure your home is comfortable and safe in your retirement. Let’s look at home improvements.
Whether it be adding more comfort around your home, modernising your living space up. Or even investing in more home entertainment-based products around your property, there’s many ways we can personalise our homes.
What's your décor style?
Home comfort – Your home is more than likely a place where you find most comfort, as it’s an environment you’ve designed tailored to you. There are a few ways you can add comfort to your home with home improvements. Kitchen islands are a great way to create more space for you and your family to gather around, enjoy home cooked meals together and socialise. If you spend more time in your living room, why not try upgrading to a luxurious reclining sofa, which you can kick your feet upon and relax. You could also find comfort in a completely new space, by building a conservatory, styling it tailored to you, and using it to escape and relax.
Modernising your home
Modernising your property is a great way to change up the style of your home whilst also staying on trend and there’s a few ways to do it. Ripping up the old carpets and swapping them out for some fresh wooden floorboards not only brightens your home up but makes it easier to clean. Technology is also becoming more modern in homes, such as having voice activated lights, self-shading windows, and even heated flooring for the colder days.[2]
Entertainment home features
Whilst our home may be a place we find comfort, it doesn’t mean it can’t be a place in which you have fun by yourself or even with your family and friends. Some ways to add entertainment round the home could consist of having a jacuzzi installed in the garden ready for summer. Investing in a BBQ grill and inviting your loved one’s round for food. If you have a spare room adding some recliner seats and a new flat screen tv and turning it into a cinema room. Our valued customers Mr and Mrs Page. Wanted some home improvements and decided to bring some more entertainment to their home by building their own garden beach bar.
The story of Mr and Mrs pages beach bar restyle
Here is the story of how Mr and Mrs Page funded their home improvements.
“Our property needed money spent on it for some home improvements. This consisted of a new garage roof, fencing, a new driveway, gates, an updated kitchen, bathroom and beach hut for our garden. We found Retirement Solutions on Facebook and things went from there.
Our adviser Paul was easy to get on with, helpful and always arrived on time. The whole process was made easy to understand and it went through without any problems or delays.
It has given us a great feeling of contentment and It has brought our house back to life. We are so happy with Retirement Solutions that we have now gone back to Paul to look at additional funds”.
What Is Equity Release?
Equity release is a type of mortgage that enables homeowners aged 55 and above to access the equity built up in their properties. There are two main types of equity release products:
Lifetime Mortgages
These are the most common form of equity release. With a lifetime mortgage, homeowners can borrow against the value of their home while retaining ownership. The loan, along with interest, is repaid when the homeowner passes away or moves into long-term care. No monthly repayments are required during the borrower’s lifetime.
Home Reversion Plans
In a home reversion plan, homeowners sell a portion of their property to an equity release provider in exchange for a lump sum or regular payments. The homeowner continues to live in the property rent-free until they pass away or move into care. Upon sale, the provider receives its share of the property’s value.
Seek Independent Advice
In conclusion, retired persons contemplating fundraising from their property, must recognise the significance of seeking independent advice. To help navigate this complex financial landscape effectively. Whether considering downsizing, equity release, or renting out property, You must weigh the benefits and risks of each option in light of their individual circumstances and goals.
Independent advisers play a crucial role in providing retirees with the expertise, perspective, and guidance. The information that is needed to help you make informed decisions and secure your financial well-being in retirement.
By leveraging independent advice, you can confidently navigate the process of raising funds from your property. But there are no guarantees that you will be able to do so. as everything is subject to your circumstances. And ensuring the decisions you may make enhance your retirement lifestyle. And safeguard your financial security for the years ahead. Hopefully, being closer to making those all important home improvements.
The Pros of Equity Release
Looking to raise funds for home improvements? Despite its historical reputation, equity release has evolved, and there are compelling reasons why retirees consider it:
Financial Freedom
Equity release provides a lump sum or regular income, allowing retirees to enjoy their retirement fully. It can fund home improvements, travel, or other lifestyle choices.
No Repayments During Lifetime
Unlike traditional mortgages, equity release doesn’t require monthly repayments. Borrowers can live in their homes without the stress of meeting regular payment deadlines.
Flexible Options
Equity release products offer flexibility. Borrowers can choose between lump sums, drawdown facilities, or a combination of both.
Ring-Fenced Guarantees
Many equity release providers offer “no negative equity guarantees.” This means that borrowers won’t owe more than the value of their property, even if interest accumulates.
Tax-Free Cash
The released equity is tax-free, making it an attractive option for those seeking additional income.
The Cons of Equity Release
Interest Accumulation
As mentioned earlier, compound interest can lead to substantial debt over time. Borrowers must understand the long-term implications.
Reduced Inheritance
Equity release reduces the value of the estate, potentially impacting beneficiaries’ inheritance.
High Fees
Equity release products come with fees, including arrangement fees, legal costs, and valuation fees. These can add up significantly.
Impact on Benefits
Means-tested benefits may be affected, so retirees should seek professional advice.
Important to note
- A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
- Equity release will reduce the value of your estate
- Equity release may leave you with limited or no property equity remaining
- Equity release may affect your entitlement to means-tested benefits
- Equity release will reduce your financial options in the future
The value of home improvements
As well as house prices increasing due to the demand of people trying to get on the property ladder, more people are increasing the value of their home with home improvements. Some of the home improvements that add value to your home consist of:
- Extend your kitchen with an extension (15% potential added value) [3]
- Converting the loft into a bedroom (15% potential added value)
- Add a new bathroom (3-5% potential added value)
- Making the living area open planned (3-5% potential added value)
“When extending your home and or converting your loft space to add extra bedrooms, you’ll still have to comply with building regulations in most cases. Your local authority will be able to offer you guidance on how to approach this”. [3]
A recent survey of 2,000 UK adults found that over one in ten Brits claimed they would offer up to £5k [4] above the asking price for a minimalist home. 12% of 18–24-year-olds would also offer up to £10k [4] over the asking price for a home that was decorated in the style.
A property with an open living plan could also potentially increase the value of your home by 15% [5] showing large open space with minimal design seems to be what home seekers are looking for.
Alternatives to Equity Release
There are several alternatives to consider:
Downsizing is one option, where you sell your current home and move to a smaller, less expensive property, freeing up cash in the process.
Renting out a room or property can provide a steady income stream.
If you’re of pension age, you might be able to take advantage of pension drawdowns or annuities.
Another option could be to take out a secured loan or mortgage, although this would require making regular repayments.
You can also look at government benefits or grants that may be available for certain individuals, particularly those with low incomes or specific needs.
Whatever you consider, it is important to carefully consider all options and seek professional advice before making any decision.
Unlocking the value of your home with home improvements
Regardless of what your home style is, renovating your home is a great way to Enhance comfort, enjoyment and give an improved style of your home.
In 2021, we saw more people choosing to use the value of their home, to make home improvements. Equity release allows UK homeowners aged 55 or over, with a property with over £70,000 to release some of the cash tied up in their property.
Our independent equity release advisers will take the time to understand your circumstances before searching the whole of the market to recommend a plan that suits you. If equity release isn’t right for you, our independent equity release advisers will let you know.
“Our adviser Steve Baldwin listened very sympathetically to our situation before explaining what options may be possible. He obtained up to date figures for our plan and went away to check if there were any options open to us. In our second appointment with Steve, he explained that he had found several options which would be suitable for us but recommended one which was at a lower interest rate and gave us a lump sum to clear some debts and free up some disposable income. He explained the whole plan clearly along with the risks and benefits. He has continued to liaise with us during the progress of the transaction and we have been impressed by his level of honesty, care and attention. We are both very grateful to Steve and Retirement Solutions and wouldn’t hesitate to recommend them.” – Carole and Chris Brooker, 18th March 2022
