If you’ve recently retired, you may be looking at conservatories for your Chester home to give you that little bit of extra space to enjoy in your new life. When it comes to retirement, some people may find its one of the most comfortable times of their lives when it comes to money, while some may be concerned about the future. Whatever your situation, it’s finally your time to relax and enjoy yourself, so it’s important to get your priorities in order, especially when it comes to the house.
For some people, the answer to unlocking their finances is an equity release on their property and, according to one provider, 48 per cent of their customers choose to do so in order to make home improvements.
But before we get into that, what exactly is equity release? According to The Money Advice Service, equity release is a way to get at the cash that’s tied up in your property if you’re over the age of 55, without having to give up the roof over your head.
They can work in one of two ways – the first is a lifetime mortgage. This is like a traditional mortgage taken out against your property, however, you don’t necessarily need to make repayments against it. The final amount is repaid when you die, or if you move into long term care. Some amount can be ring-fenced for inheritance in this process usually.
The second way is a home reversion. For this, you sell all or part of your home to a provider for a lump sum or for regular payments. You can continue to live at the property without paying rent, but you must agree to maintain and insure it during this time. At the end of the plan, the property is sold and the money is split according to the percentage you retain.
So, for provider Retirement Advantage, the largest proportion of their customers did this in order to make a home improvement. It’s important to note that if you do make improvements that increase a home’s value, that the percentage of ownership stay the same, so while you will see some return on your investment, some will go proportionally to your provider. Of course, it’s most likely that these improvements will be more about improving quality of life than increasing property value.
Alice Watson, head of product and marketing at Retirement Advantage Equity Release, said: “What stands out is the sheer diversity of reasons people tell us they plan on using equity release for. Alongside one-off expenditures like paying off a mortgage or going on holiday, more people are using equity release to fund their day to day living.”
“This is a sure sign that wealth stored in property is being considered alongside pensions, ISAs and savings accounts as part of a holistic view of finances,” she continued.
Interestingly, 17 per cent also used their equity release to gift to a family member, with a further 3 per cent using it to help others onto the property ladder.
