Should I Move Home or Stay and Renovate? The Equity Release Answer
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, either to make it more suitable for your needs or 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 can be costly and stressful, even without considering the emotional impact of leaving the family home. Consider also the prospect of decorating and furnishing a new 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
An increasingly popular third option is to consider using an equity release product. If you are aged 55 and over and own your home then you could be eligible to release equity from your property without having to downsize.
A Lifetime Mortgage is a type of equity release product that enables you to access some of your home’s value, which could be used to renovate and maximise your home’s value whilst retaining full ownership of your home.
With no obligation to make 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, as you could increase the value of your home and help to offset the impact that added interest on the sum released has on your estate’s value.
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 it could be considered as taking a backward step down the property ladder by moving to a less valuable home.
If you decide that using a Lifetime Mortgage to access your equity is something to explore, then you can use our free online equity release calculator to find out how much tax-free cash you can release.
Renovating with a Lifetime Mortgage
Using your home’s value to pay for renovations can be considered an investment in your home. Not only are you maintaining and improving your home’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 could prove to be a cost effective option.
Whether you're curious as to how much you can release, or you want to take the initial steps towards releasing equity, our handy calculator will give you the information you require. You can also contact us on 0800 029 1233 to discuss your needs with a view to arranging a no-obligation appointment with one of our equity release advisers.
Releasing equity from your home will reduce the value of your estate and may effect your entitlement to any means-tested benefits that you are in receipt of. An adviser can explain these risks to you, as well as help you benefit from our carefully selected range of products that they will compare for you. With flexible features prioritised throughout, we’ve designed this selection of products to offer great value for you and your family, both now and in the future. All products recommended will come from lenders who are members of the Equity Release Council. This will mean that they carry some inbuilt guarantees such as maintaining full ownership of your property, and never owing more than the value of your home.
A Lifetime Mortgage may impact the value of your estate and could affect your entitlement to means-tested benefits. Think carefully before securing other debts against your home. To understand the features and risks ask for a personalised illustration. Reader's Digest Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690. Our adviser will talk through the setting up costs of a Lifetime Mortgage before you make any decision to proceed.