A national desire for home improvements is driving a surge of activity in the equity release market, as homeowners look to release funds to upgrade their properties. Read about this and more in our Q2 report.

Older homeowners are often very attached to their homes. A focal point for family gatherings over the years, their homes are places where fond memories are made.

Sadly, property ages with us. Decoration goes out of date, furniture becomes old fashioned, and the latest technology changes the way we use our living spaces. Hand in hand with this, is a shift in attitudes among homeowners who are now looking for more open plan living, with many of us seeking to remove walls and create more contemporary spaces at home.

If our health begins to decline, that can provide further impetus to modernise and adapt our living arrangements, so our houses remain functional as well as comfortable as our needs change. Add to this the growing desire to be more eco-friendly and it’s easy to see why more and more homeowners are keen to make changes.

Knight Frank Finance has helped a large number of clients raise the funds they need for home improvements, without depleting savings or impacting on their current income. For those over 55, a lifetime mortgage or a retirement interest-only mortgage are popular choices. Interest rates on these types of borrowing have fallen dramatically in the last few years.

How it works in practice: a simple scenario

A couple in their 70s approached Knight Frank Finance, seeking a way to clear their existing £300,000 mortgage on their £2 million property, and raise an additional £130,000 for some major renovations. They had been winding down their careers over the last few years and were ready to fully retire, which meant their income was about to decrease. So at the same time as remortgaging, they had a desire to reduce their outgoings.

The couple were concerned about accessibility at home and wanted to make adaptations to open up the layout and improve functionality of their living space, to better suit their changing needs. They had also planned a range of other enhancements to improve their home in readiness for retirement, from bathroom upgrades to landscaping the garden.

The solution

Knight Frank Finance arranged a lifetime mortgage for a lump sum of £430,000 at the outset, with a further £70,000 available through a drawdown facility should they need further funds in the future or require contingency on top of their initial budget for the improvements.

With the initial £430,000 they were able to repay their existing mortgage (£300,000) and unlock funds for the works (£130,000). They chose to allow the interest on their lifetime mortgage to roll-up, so they no longer had monthly payments to worry about. Not only were they able to repay the original mortgage and raise the funds they needed, this also reduced their regular outgoings.

The advantages go further. Download our Later Life Finance Q2 report: Room for improvement? for more information

If you would like to know more about Equity Release, please get in touch with our Later Life Finance experts by email later.life@knightfrankfinance.com or call 01483 947764