Equity Release for Home Improvements

Main guide

Equity Release for Home Improvements

Can you use equity release for home improvements?

Yes, equity release can sometimes be used for home improvements.

With a lifetime mortgage, eligible homeowners aged 55 or over can release money from their home while continuing to live there and retain ownership.

The money may be used for many purposes, including improving, repairing or adapting the home.

• Common examples include:
• roof repairs
• replacing windows or doors
• heating system upgrades
• new kitchen or bathroom
• insulation or energy efficiency work
• accessibility adaptations
• stairlifts or ramps
• wet rooms or walk-in showers
• extensions or extra living space
• garden or driveway improvements
• structural repairs
• general modernisation

However, just because equity release can be used for home improvements does not mean it is automatically suitable.

The adviser should consider why the work is needed, how much it will cost, whether alternatives are available and how the long-term cost affects you.

You can read more about how lifetime mortgages work here: /equity-release/how-does-a-lifetime-mortgage-work/

When might equity release for home improvements make sense?

Equity release may be worth considering where the work supports your long-term needs and other options are unsuitable.

• It may be considered if:
• you want to stay in your home
• the property needs essential repairs
• the work improves safety or accessibility
• adaptations help you live independently
• the home is no longer suitable without changes
• you cannot or do not want to downsize
• you do not have enough savings
• monthly repayments on another mortgage are not affordable
• grants or support are unavailable
• family support is not suitable
• the cost and long-term impact are understood

Home improvements that help you remain safely and comfortably in your home may be more justifiable than borrowing for purely cosmetic work.

What types of home improvements are more suitable?

The suitability depends on your circumstances, but some types of work may have a clearer practical benefit.

• These may include:
• making the home safe
• repairing structural issues
• replacing a failing boiler
• improving heating or insulation
• fixing damp or roof problems
• adapting bathrooms for mobility
• installing ramps, rails or stairlifts
• creating downstairs living space
• widening doorways
• making the garden safer to access
• improving security
• reducing running costs

These improvements may support comfort, independence, safety and future care needs.

The adviser should still check cost, affordability, alternatives and long-term impact.

What types of work need extra thought?

Some home improvements may be more discretionary.

• These may include:
• luxury upgrades
• cosmetic renovations
• high-end kitchens or bathrooms
• garden landscaping
• conservatories or extensions for lifestyle reasons
• non-essential decorating
• gifts or family improvements linked to your home
• improvements that may not add value

This does not mean you cannot use equity release for quality-of-life reasons. It means the cost should be weighed carefully against the long-term debt.

Borrowing against your home for non-essential work may not be suitable if it reduces future flexibility, inheritance or benefits.

Should you check grants before equity release?

Yes. If the work involves repairs, adaptations, disability support, heating or safety, you should check whether grants or local support are available before using equity release.

• Possible sources of support may include:
• local authority grants
• Disabled Facilities Grants
• home improvement assistance
• energy efficiency schemes
• heating or insulation support
• charity support
• support from occupational health or social care teams
• care-related adaptations
• local welfare schemes

Support varies by area, eligibility and the type of work needed.

If grant funding is available, it may reduce the amount you need to borrow or remove the need for equity release altogether.

Can equity release pay for adaptations?

Yes, equity release may be used to pay for adaptations if other support is not available or not enough.

• Adaptations may include:
• stairlifts
• ramps
• wet rooms
• accessible bathrooms
• downstairs bedrooms
• wider doorways
• improved access
• handrails
• level flooring
• kitchen adaptations
• mobility-friendly garden access

If the adaptations are needed because of health, disability or care needs, check local authority support first.

You may also want to speak to an occupational therapist before committing to major works. They may help identify the changes that are most suitable for your needs.

Can equity release pay for energy efficiency improvements?

Yes, it may be used for energy efficiency improvements.

• Examples include:
• insulation
• double glazing
• heating upgrades
• boiler replacement
• draught-proofing
• solar panels, where suitable
• ventilation improvements
• smart heating controls
• replacing inefficient systems

These works may improve comfort and reduce bills, but the financial saving may not outweigh the long-term cost of equity release.

• Before borrowing, compare:
• expected cost of the work
• expected bill savings
• available grants or schemes
• effect on property value
• interest over time
• repayment options
• alternatives

Energy improvements can be worthwhile, but the funding method matters.

Should you take a lump sum or drawdown?

The right structure depends on how and when the work will be paid for.

• A lump sum may be suitable if:
• the work is immediate
• costs are fixed
• you have signed quotes
• the contractor needs payment upfront
• the project is one large job
• you need to repay existing borrowing linked to the work

• Drawdown may be suitable if:
• the work will happen in stages
• costs are uncertain
• you want funds available later
• you do not want to take more than needed upfront
• you want to reduce interest build-up
• you may have future adaptation needs

With drawdown, interest is usually charged only on the money actually released, not the unused reserve. This may reduce the long-term cost if you do not need all the money immediately.

Read more here: /equity-release/lump-sum-vs-drawdown-equity-release/

Why is the cost of the work important?

Before taking equity release, you should understand the full cost of the work.

• This should include:
• written quotes
• VAT
• professional fees
• planning or building control costs
• survey costs
• contingency allowance
• temporary accommodation if needed
• furniture or finishing costs
• possible delays
• maintenance after completion

If the estimate is too low, you may need more money later. If you borrow too much upfront, interest may build on unused funds.

A good adviser should ask whether the cost is realistic and whether the work can be phased.

Will home improvements add value?

Some improvements may add value to your home, but this should not be assumed.

Essential repairs may protect the property?s value. Adaptations may improve quality of life but may not always increase market value. High-end improvements may cost more than they add.

Even if the work adds value, the lifetime mortgage interest may still reduce the equity left later.

• Before assuming the work is an investment, consider:
• likely property value impact
• local market conditions
• quality of the work
• whether the improvement appeals to future buyers
• long-term interest cost
• saleability
• your own comfort and needs

The main reason for the work should usually be your needs, safety or quality of life, not simply hoping to increase property value.

How does interest affect the cost of home improvements?

If you use equity release for home improvements and make no repayments, interest is usually added to the lifetime mortgage.

This means the true cost of the work may grow over time.

For example, a home improvement project paid for through a lifetime mortgage may cost more in the long run than the contractor?s invoice because interest can roll up for many years.

• The long-term cost depends on:
• amount released
• interest rate
• fees
• whether you make repayments
• whether you use lump sum or drawdown
• how long the plan runs
• whether further borrowing is taken

Your adviser should show a personalised illustration so you can see how the balance may grow.

Read more here: /equity-release/equity-release-interest-rates-and-costs/

Can repayments reduce the cost?

Yes, voluntary repayments may help reduce the long-term cost.

Many modern lifetime mortgages allow you to make repayments, subject to lender rules.

• This may include:
• paying some or all of the interest
• making partial repayments
• using savings later to reduce the balance
• repaying a percentage of the loan each year
• flexible repayments when affordable

Repayments may help reduce the amount of interest that rolls up and preserve more equity in the property.

However, you should only make repayments you can afford. You should also keep enough savings for emergencies and future needs.

Could benefits be affected?

Yes. Equity release can affect means-tested benefits.

If you release a lump sum for home improvements and keep it in your bank account while waiting for the work to start, it may be treated as capital. This could affect benefits such as Pension Credit, Council Tax Support or help with care costs.

• The impact depends on:
• how much is released
• whether it is taken as lump sum or drawdown
• how quickly it is spent
• what it is used for
• your existing savings
• the benefits you receive
• local authority rules where relevant

If benefits are important, drawdown or staged payments may need to be considered, but benefit checks are still essential.

Read more here: /equity-release/equity-release-and-benefits/

Could inheritance be affected?

Yes. Using equity release for home improvements can reduce inheritance.

The lifetime mortgage and interest are usually repaid from the sale of your home when the last borrower dies or moves permanently into long-term care.

If interest rolls up, the balance can grow and reduce the amount left to beneficiaries.

Home improvements may improve your quality of life or protect the property, but they do not remove the inheritance impact.

• If inheritance matters, consider:
• borrowing less
• using drawdown
• making voluntary repayments
• checking grants first
• using savings where appropriate
• asking family if they wish to contribute
• considering inheritance protection
• reviewing alternatives

Read more here: /equity-release/equity-release-and-inheritance/

Should family contribute to home improvements?

Family may choose to contribute, especially if the work improves your safety or helps keep you in your home.

This can sometimes reduce the amount you need to borrow.

However, family contributions need careful discussion.

• Consider:
• whether the money is a gift or loan
• whether other beneficiaries agree
• whether the family expects ownership rights
• whether legal advice is needed
• whether the contribution is affordable for them
• whether the work benefits you or someone else
• whether there could be future disputes

No one should pressure you to use equity release for improvements that primarily benefit them.

What if the work is urgent?

If the work is urgent, equity release may not always be the fastest or best option.

• Urgent work might include:
• unsafe electrics
• broken heating
• roof leaks
• structural problems
• serious damp
• accessibility needs after illness or injury
• essential bathroom adaptations

• Before using equity release, check:
• insurance claims
• emergency grants
• local authority support
• charity support
• family help
• short-term finance, where suitable
• whether the contractor can stage payments
• whether the current mortgage lender can help
• whether the repair is essential or can be temporary

Equity release can take time because advice, application, valuation and legal work are required.

What alternatives should you consider?

• Before using equity release for home improvements, consider:
• savings
• local authority grants
• Disabled Facilities Grants
• energy efficiency schemes
• insurance claims
• family support
• remortgaging
• a retirement interest-only mortgage
• a later-life mortgage
• unsecured borrowing, where suitable
• phased works
• delaying non-essential improvements
• downsizing
• selling another asset
• budgeting changes

The best option depends on the work, cost, urgency, your income, property, benefits and long-term plans.

Read more here: /equity-release/alternatives-to-equity-release/

When might equity release be suitable for home improvements?

• Equity release may be suitable where:
• you are aged 55 or over
• you want to stay in your home
• the work is important or beneficial
• the cost is realistic and understood
• grants or support are unavailable
• savings are not enough or should be preserved
• monthly repayments on other borrowing are unsuitable
• alternatives have been considered
• benefits have been checked
• inheritance impact is understood
• the product offers suitable flexibility
• the release amount is not more than needed

It should not be recommended simply because the property has enough equity.

When might equity release be unsuitable?

• Equity release may be unsuitable if:
• the work is not essential and could wait
• grants or support are available
• savings could be used safely
• a cheaper borrowing option is affordable
• the amount needed is small
• benefits would be seriously affected
• you want to preserve the full property value
• the work is mainly for someone else?s benefit
• costs are unclear
• you may move soon
• the plan would leave too little future flexibility
• you are being pressured by family or contractors

A suitable recommendation should explain why equity release is better than realistic alternatives.

Questions to ask before using equity release for home improvements

Before deciding, ask:

• Is the work essential, useful or mainly cosmetic?
• Do I have written quotes?
• Have I included VAT, fees and contingency?
• Could grants or local support help?
• Could savings or family support reduce the amount needed?
• Should I use lump sum or drawdown?
• Will the money sit in my bank account before being spent?
• Could benefits be affected?
• How will the loan balance grow over time?
• Can I make repayments?
• Will the work improve safety or independence?
• Will the work add value or mainly improve comfort?
• How will inheritance be affected?
• What happens if I need more money later?
• Could I move instead of adapting the home?
• What alternatives have been considered?

A good advice process should answer these clearly.