Fund home improvements with equity release

Over a quarter of over 55s who unlock the cash in their homes do so to make home improvements according to Age Partnership’s data from the first half of this year.

60% of people consider moving home to be a difficult task*, so it’s perhaps not surprising that homeowners are looking to invest in their current property instead. 

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Whether you’re dreaming of a new kitchen for entertaining or need to make adaptions to suit your changing needs later in life, equity release could help you finance this.

The amount you can unlock depends on the value of your property and the age of the youngest homeowner, along with your needs, but you may be able to access between £10,000 and 53% of the value of your property.

How does equity release work?

If you’ve owned your home for a number of years, the value of your home may have increased.

This, coupled with the mortgage repayments you have already made, means you might have a sizeable amount of equity built up in your home.

Equity release is a way to access this cash, tax-free.

You can choose how you want to access the cash you unlock, either as a lump sum or over regular smaller instalments.

Plus, some equity release plans don’t require any regular repayments, so you have the freedom to choose whether to make payments.

If you do wish to make regular repayments this is also an option, and it could help reduce the amount of interest that rolls up overtime.

Plus, there are also plans that may allow you to make voluntary payments subject to certain limits, but early repayment charges may apply above a set value.

It’s a condition of equity release that you must first repay any existing mortgage, however once this is repaid the money you release is yours to enjoy spending, whether that’s on home improvements, a new car or providing a financial gift to loved ones.

What types of plans are available?

There are two main types of equity release, a lifetime mortgage and a home reversion plan.

A lifetime mortgage, the most popular type of plan, is secured against your property and you maintain 100% home ownership.

Whereas with a home reversion plan you must sell a share of your home, but you can continue living in it rent free until you die or move into long-term care.

Advice is required before proceeding with equity release. A specialist broker can discuss all the options available to you, including what impact it could have on the size of your estate over time, as equity release will decrease this, and if your entitlement to current and future means‑tested benefits may be affected now or in the future.

Further, alternative options for raising funds such as borrowing from loved ones, or taking in a lodger, could be more suitable for your needs.

Safeguard your loved ones

If you’re considering equity release, it’s important to discuss this with your family as it will impact the amount of inheritance you can leave.

With some equity release plans you can ring-fence a portion of your property’s future value, to guarantee inheritance to your family.

All plans protected by the Equity Release Council (ERC) also have a no negative equity guarantee, meaning your estate will never owe more than your property is worth when it is sold.

When you pass away or move into long-term care, your house is sold and the loan, plus accrued interest, is paid off with the remaining money passing to your estate.

Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and will reduce the value of your estate and impact funding long-term care.

To understand the features and risks ask for a personalised illustration.

We provide initial advice 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.

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.

*‘Seamless Transitions’ report, published by the Home Builders Federation (HBF) Feb 2024