With recent changes in the economy and building material costs increasing, people who are at, or approaching, retirement may find themselves with less money to complete their desired home renovations.
This is one of the reasons why in the last few years there has been a growing appetite to release equity for home improvements..
Research from equity release advice firm, Age Partnership, highlights that the leading reason for releasing equity from their homes is to complete home improvements*.
In the last two years there has been an increase of 16% in the proportion of people releasing equity from their homes to make home renovations.
In 2023 over 28% of people who released tax-free cash from their home did it for home improvements, whereas in 2021 the figure was 24%.
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Could equity release be right for you? Find out how much money you could unlock.
Make vital or luxury improvements
One of the main benefits of equity release for many people is that it provides you with a tax-free lump sum of cash you can enjoy spending, once you’ve repaid any existing mortgage which is a condition of equity release.
With the money you release, you could make vital home improvements if your accessibility needs have changed, such as installing a downstairs bathroom or stairlift.
Alternatively, if you’re planning on spending more time in your home and garden entertaining loved ones in retirement, you could splash out on a new kitchen or landscape your garden.
Who can use equity release?
Anyone thinking about releasing tax-free cash from their home by using equity release must be at least 55 years old and your property must be worth £70,000 or more.
The amount of money that you can access is determined by the age of the youngest homeowner and the value of your home, but the lowest amount is £10,000.
Calculate how much tax-free cash you could unlock.
To take out equity release you must get advice from a qualified adviser.
An adviser who is a member of The Equity Release Council, such as Age Partnership, will provide you with access to plans that meet all the Council’s product standards, such as having the right to remain in your property for life or until you need to move into long-term care.
They also come with a no negative equity guarantee which means that your estate will never owe more than your property is worth when it is sold.
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How else could you use the money that you release?
Once you have repaid any existing mortgage on your home the money that you release is yours to enjoy spending.
You may want to go on that dream holiday, buy a new car or provide some financial assistance to family members.
Andrew Morris, senior equity release adviser at Age Partnership said “Releasing equity to repay an existing mortgage is often the most popular reason for releasing equity each year, however in 2023 we saw this shift to making home improvements.
Changes in attitudes towards improving current properties rather than moving has contributed to the rise in the percentage of people wanting to unlock equity to make home improvements.
In fact, research from MyBuilder.com shows approximately one third (33%) of UK homeowners plan on making home renovations instead of moving.
Homeowners are after energy efficient improvements which can help reduce their bills, as well as giving their property a much needed refresh.”
Calculate how much tax-free cash you could unlock.
How much does it cost?
Through Age Partnership, initial advice is provided for free and without obligation. Only if your case completes would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care.
The money that you release, plus accrued interest would be repaid upon death, or moving into long-term care.
Your advisor will consider your individual circumstances and talk you through everything you need to know, including the potential risks and impact it will have on your entitlement to means tested benefits now or in the future.
*Age Partnership Equity Release "Reasons to Release" data 2023
Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.
