Use Equity Release To Power Forward With Your Home Improvement Grand Designs

The good old days of 125% mortgages are behind us; their role in creating an enormous housing crash has been duly noted

. However, also gone are the days of lenders bending over backwards to help to first time buyers, and of the straight forward act of re-financing pre-existing mortgage deals with accumulated equity to make home improvements.

Before the global financial crisis, many thousands of people remortgaged every month in order to release equity from their homes to pay for home improvements or to buy one off items such as a dream holiday or new car. However, in 2011, it is more difficult to agree a remortgage of this kind.

One option that is available to you if you are nearing retirement is an 'equity release' scheme, sometimes called a 'lifetime mortgage'. These schemes allow individuals of retirement age to release equity from their home in order to fund home improvements.

Equity Release remortgage rates are hugely variable. A standard fixed rate is 7.84% but this includes a lump sum and no inheritance guarantee. A standard flexible option is normally priced at 7.14% but includes inheritance guarantees. For the purposes of this article we have looked at Aviva's rates, so other lenders might offer differing deals.

Once the equity is released, you can use the money to fund home improvements including a new kitchen or bathroom, installation of central heating or even an extension or conservatory. This can help you maximise the value of your property.

When you retire, jobs around the house may suddenly be more pressing. You may have been delaying home improvements whilst you were working but now have time to undertake all those repairs and other jobs.

You may want to have the windows redone, add a conservatory to spend your summer days or redecorate the property to increase the comfort in your home.

For example, simply repainting your home into a more neutral colour or replacing your curtains and carpets can make it more attractive. Having your garden professionally landscaped can create a lovely outdoor area which may also appeal to prospective buyers.

Equity release can be an excellent way of raising the cash that you need to undertake your home improvements. Whilst remortgage rates can vary, it is possible to put a plan in place that will ensure you raise the funds you need whilst not committing you to a high monthly repayment that you may not be able to afford on your pension income.

Before taking on an equity release mortgage, it is important to speak to your family as of course it will affect inheritance because some of the value of your home would have to be repaid on your death, which could come as a surprise if they had not been informed earlier.

by: Howard Ogollegos

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