New research from Key, has revealed that older homeowners are using equity release to make home and garden improvements. Equity release has been a common option for the over 55’s to generate a lump sum for years. However, the way in which they are used has changed dramatically.
Here, we’ll look at the findings of the latest equity release research and why home and garden improvements are taking precedence.
How much equity is spent on home and garden renovations?
In the first half of 2020, garden renovations were a popular way to spend equity. A staggering 59% used equity release to make home and garden renovations. However, just 16% of proceeds released were spent doing this.
In the second half of the year, the rate of renovations slightly dropped. However, many are still choosing to take out equity to fund their improvement projects. As the pandemic continues, older homeowners are being a little more wary over whether or not to take out equity in their property. It is recommended you speak with an advisor before deciding whether or not it’s the right option for you.
Why do older homeowners want to renovate their homes?
The rise in equity borrowing to take care of home improvements at the start of the year was likely fuelled by the pandemic. As everything went into lockdown, homeowners turned to home improvements to both keep them busy and take care of jobs they usually don’t have the time for.
However, even before the pandemic, homeowners were said to be driving the home improvement market. It is likely this is down to older homeowners looking for a forever home. They either want to improve their current home, so it is as comfortable as possible. Or they might want to sell their current property and invest in a different forever home.
What types of renovations are popular?
There are a number of renovations that prove most popular with the over 55’s. Most commonly, equity is used to pay for extensions to the home according to research from SunLife. Swimming pools, cinema rooms, home saunas and conservatories are the most popular ways to spend equity on home renovations.
Many homeowners are also focusing on taking care of repairs that they have been putting off. Replacing old heating systems and boosting insulation are other types of renovations proving popular.
Overall, equity release has been a great option for older homeowners in 2020. Due to the pandemic, it has encouraged more people to tackle home renovations and improve their living space. However, despite most homeowners taking out equity to pay for renovations, only a small percentage of the funds received were used for this purpose.