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 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.

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 face-to-face home visit with one of our financial advisers. The Flexible Lifetime Mortgage is by leading insurer Aviva and is only available through qualified financial advisers such as those working with the Reader’s Digest Equity Release Service. *(Equity Release Council Lending Figures Q3 2010 – Q3 2015) 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 (http://www.fsa.gov.uk/register/home.do) under reference 610205. In using this website I give express consent to Responsible Life Limited to contact me on the details provided from time to time. Calls may be recorded for training and quality purposes. This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a personalised illustration. Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295. Our adviser will talk through the setting up costs of a lifetime mortgage before you make any decision to proceed.