Equity Release From Your Current Property Can Give You The Cash To Finance Your Dream Home Improvements
Remortgaging has become increasingly difficult over recent years as lenders have tightened their criteria. The days of 100 per cent mortgages for first time buyers and 125 per cent deals for people looking to remortgage have long gone. This has made it tough for many people to borrow money to fund essential home improvements.
Before the economic crash, this was the way the majority of people would make those long overdue home improvements or luxury holidays, it was simple enough, you’ve paid for your house, now let it pay for you. In the tough times of 2011, such mortgages are rarer than Faberge eggs.
One way that people approaching retirement can raise cash is to consider a lifetime mortgage, or ‘equity release’ scheme. These schemes allow you to withdraw some of the equity in your home in order to fund home improvements or to pay for larger one off purchases such as a new car.
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.
Equity Release is based on the idea that the lender will offer you a portion of the home’s value in return for a percentage of the proceeds of the property sale when you die. This can be a lump sum or monthly instalment. In the vast majority of such cases individuals must be over 60 to benefit from this type of remortgage deal. The most obvious benefits of Equity Release are that homeowners do not have to sell their house and can live in it indefinitely.
Once you reach retirement age, you may find that you have more time available to do the things that you’d been putting off for various reasons, such as improving your home and doing repairs on the property. A remortgage on your equity release mortgage can help you to fund such ventures.
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.
Redecorating is a very cost effective way to add value to your home, and is also an easy way to increase the attractiveness of your home to potential buyers if you decide to sell in the future.
If you do need to undertake repairs or redecoration to your home, equity release schemes can be the perfect way of providing the funds. You can take advantage of the remortgage rates offered by these schemes and benefit from a bespoke plan that ensures you don’t have to make substantial repayments every month.
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.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.