As the UK experienced its highest property price growth in four years, home owners who are interested in harvesting or maximising their increased property value are faced with a question, "Do I move home or do I stay and renovate?"

Should I Stay or Should I Go?

Both options have sound reasoning behind them. Moving to a cheaper home–also known as downsizing–releases the stored equity from your home, tax-free to spend as needed. Staying and renovating involves improving the property to maximise your home’s value to harness later or pass on as an inheritance.

Both solutions should be considered carefully though for the following reasons:

If you move home

The draw here is receiving the tax free release of equity, but moving home is costly and stressful averaging at £8,428 (£20,825 in London) to move. Consider also the prospect of decorating and furnishing the next property to make it a home.

If you stay and renovate

Staying put in the home you have created over the years has clear benefits. Although you cannot access the property wealth in the same way as downsizing, you instead are able to remain in your home, close to friends and family whilst adding to your home’s value to either leave as an inheritance or to access later.

A third Option

A little known third option is a hybrid of the first two. If you are aged 55 and over and own your home then you are also eligible to release equity from your property without having to downsize.

A Lifetime Mortgage is a type of equity release that enables you to access some of your property wealth to renovate and maximise your home’s value whilst retaining full ownership of your home, so no need to sell or move.

With no monthly payments and the option to guarantee an inheritance for your heirs, you can stay in the home you love and capitalise on the current property price trend. 

Consider the value added with renovating:

The added value of renovation

 

So how do you decide which is the right one for you?

This really does depend entirely on your personal preferences. If moving home is a life event you can bear then downsizing may work, however with property prices continuing to increase, it can be considered as taking a backward step down the property ladder by moving to a less valuable home.

Factor in these house price predictions:

Average house price predictions

If you decide that using a Lifetime Mortgage to access your property equity is something to explore, then consider that as you withdraw equity from your property there will be less for your estate to inherit later on. This effect can be balanced though by reserving an inheritance as one of the flexible options available with a Lifetime Mortgage.

Renovating with a Lifetime Mortgage

Using your property’s value to pay for renovations can be considered an investment in your home. Not only are you maintaining and improving your property’s condition but you can also ensure that your home is practical for life.

Some larger, more essential renovations are costly such as driveways and extensions, and while they can make a significant difference to your property’s practicality, borrowing money for these bigger projects in later-life becomes difficult as age and income restrictions from lenders reduce eligibility to borrow.

A Lifetime Mortgage though is specifically designed for later-life borrowing and is currently cheaper than the top three conventional forms of borrowing; namely credit cards, personal loans and overdrafts.

To find out if you are eligible to release equity from your home and for a personalised illustration about the risks and benefits of equity release, simply use the interactive calculator below to receive an instant, live figure. 

Alternatively you can free phone 0808 231 1968 to speak to a specialist who can provide free initial advice based on your unique details and answer any questions you may have.

 

 

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