Retirement is a great opportunity to revamp your living space and make some home improvements. Whether you’re interested in building an extension, doing up the bathroom or adding solar panels, home renovations can modernise your home and increase its value.
That said, home improvements can often be costly and can raise questions like; ‘how do I pay for expensive home repairs?’ or ‘should I remortgage for my home improvements?’ To help, we compare two ways you can release money from your home to pay for renovation plans.
Remortgaging for home improvements
Remortgaging is when you move your current mortgage to a new deal, either with your current lender or a new provider. You can remortgage for home improvements by releasing equity you’ve built up over the time you’ve owned your home. It’s a popular way to fund home improvements in the UK. It can take several weeks though, and could include exit fees if you move to a new lender, so you should factor this into your plans. You’ll always own your own home though, and you could use the money to increase the value of your home.
It’s worth keeping in mind that remortgaging to fund home improvements isn’t right for everyone. It can be difficult to remortgage in later life, as the affordability checks are based on your age and income. And, if house prices fall, you could end up in negative equity, making moving or remortgaging again difficult. If you don’t keep up with your repayments, your home may be repossessed. If you’re over 55, you may be better suited to using equity release for home improvements.
Fund home improvements with a lifetime mortgage
If you have ambitious plans for your renovations, you might require a bigger budget and be looking for ways to borrow larger amounts of money. A lifetime mortgage, a type of equity release, could be one way to fund your project without having to make monthly repayments. A lifetime mortgage allows you to access the money that’s tied up in the value of your home, allowing you the freedom to use the money the way you want.
One of our customers, Lillian, used a lifetime mortgage to convert a former chapel into her forever home. She used the money to create a space that was eco-friendly and sustainable, re-using building materials as much as possible.
Like any other mortgage, a lifetime mortgage is a loan secured against your home. But unlike other mortgages, you can choose to make all, some or none of the monthly interest payments. So you won’t need to prove you can cover any repayments costs. The amount you can borrow is based on your age and the value of your home. It may impact any means-tested benefits you receive though and can affect any inheritance you leave behind. There may be cheaper ways for you to borrow money for your home improvements, so there’s plenty to think about.
You can only take out a lifetime mortgage through a qualified financial adviser, who will make sure that:
- It’s the right choice for you
- You choose the right product
- You fully understand the product you’ve chosen
When thinking about how to fund home improvements, it’s worth considering all of your options. Whether you have savings or pensions to cover the cost or are looking to remortgage or take out equity release, you should always seek advice. You can find one through Unbiased.
If you’d like to see how much equity you could release from the value of your home, try our equity release calculator.