Retirement can be the perfect time to upgrade your home and consider valuable improvements. Whether it’s adding an extension, updating the bathroom, or installing solar panels, modernising your home can enhance both comfort and value.
However, home improvements can come with significant costs, leading to questions such as, “How can I afford these repairs?” or “Should I remortgage to finance my renovations?”
To help answer these concerns, this article compares two practical ways to release funds from your property for your renovation goals.
Remortgaging for Home Improvements
Remortgaging involves switching your current mortgage deal, either with your existing lender or a new provider. It allows homeowners to release equity built up over time, often used to fund home improvements. This approach is common in the UK for increasing property value. However, it can take weeks to complete, and moving to a new lender may include exit fees. Consider these factors carefully before proceeding.
Using a remortgage to fund improvements may not suit everyone. Affordability checks depend on age and income, which may complicate the process in later life. Additionally, falling house prices could result in negative equity. This would make moving or remortgaging again more challenging. If repayments are missed, your home could be repossessed.
For homeowners over 50, equity release might be a better option. A lifetime mortgage, for instance, allows access to funds while paying off any remaining mortgage balance. Early repayment charges could apply in such cases, so reviewing the terms is essential.
By assessing your financial situation, goals, and options, you can determine the best solution for your circumstances. Always consult a financial advisor for tailored guidance on UK mortgage options.
Fund Home Improvements with a Lifetime Mortgage
Are you planning significant home renovations and require a larger budget? A lifetime mortgage could be a solution. This financial option, a type of equity release, enables you to access the money tied up in your property’s value. It provides flexibility to use the funds for your home improvement goals.
Flexible Repayment Options to Suit Your Budget
A lifetime mortgage allows you to retain home ownership while releasing equity. Importantly, you decide whether to make monthly repayments or let the interest be added to the loan. However, choosing not to repay interest means it will compound, potentially increasing the total loan amount significantly over time.
A Payment Term Lifetime Mortgage is an alternative for those seeking more control. This option requires full interest payments each month for a fixed term. However, failure to meet payments could result in your home being repossessed as a last resort.
A Real-Life Example: Lillian’s Eco-Friendly Dream
One customer, Lillian, transformed a former chapel into her dream eco-friendly home using a lifetime mortgage. She invested the funds in creating a more energy-efficient space by reusing building materials wherever possible. Her story highlights how this type of mortgage can support ambitious renovation projects.
When considering a lifetime mortgage, it’s essential to seek professional advice. This ensures you fully understand the terms, risks, and potential costs. Doing so lets you determine whether this option aligns with your financial plans and renovation needs.
What Should I Do Next?
When planning to fund home improvements, evaluate all available options before deciding. Using savings might be an ideal choice if the costs are manageable. However, consider remortgaging or exploring equity release if additional funding is necessary. These options can provide access to funds but require careful thought.
It’s essential to seek professional advice tailored to your circumstances. Mortgage advisers can help you understand the implications of each option. Independent guidance is available through platforms like Unbiased, where you can find experienced advisers.
Use an equity release calculator if you’re curious about how much equity you could release. This tool offers an estimate based on your home’s value, helping you plan your finances effectively.
Thank you for reading our “Equity Release vs Remortgage for Home Improvements” publication. Stay “Connect“-ed for more updates soon!
