Home improvements are a major reason why those at or in retirement enter into Equity Release plans. Upgrading and maintaining a property requires an on- going financial commitment which is impossible to meet for many people as they get older, particularly as it becomes more difficult for them to undertake DIY projects themselves.
Following the more buoyant house market over the past year or so, research by the Equity Release Council (“ERC”) has suggested that 40% of those aged 55 and over are considering improving their homes to make them more valuable and suitable for retirement living. The top tasks under consideration are internal & external redecoration and modernising the kitchen. With higher house prices, a potentially larger cash facility can be established.
A Lifetime Mortgage is often a very suitable method of financing home improvements because a cash reserve can be set up which is available for draw down as and when the works are carried out with interest only being charged from when funds are withdrawn. Furthermore the initial sum withdrawn can be less then £10,000. Unlike other residential mortgages, with a roll up Lifetime Mortgage, there is no affordability test applied to the application process.
The ERC report indicates also that the average expenditure needed is over £10,000 and that 20% of people have savings of less than this sum. Others will be reluctant to deplete their savings which are often earmarked for other purposes and emergencies.
Alternatively, funds can be released as a lump sum and the average taken by Equity Release plan holders over the past year has risen to over £60,000.
Releasing some of the money tied up in the home after house prices have risen can be a way of capitalising on the growth, and can also help to maintain the value of a property. There is a wide range of Lifetime Mortgages available and it is most important to discuss your plans with a specialist Equity Release adviser. Being independent and impartial, a firm like Bower will explain how the various plans work, and if you decide to go ahead, help you select the best Lifetime Mortgage for meeting your home improvement needs.