What is Spray Foam Insulation?
Spray foam insulation (SFI) is an insulation material applied using a spray gun. The foam is made from a combination of chemicals that react and expand, creating a layer of insulation that fills gaps and seals off areas to prevent air and moisture infiltration. This can reduce heat loss and help save on energy bills. Spray foam insulation can be an excellent way to insulate your home, but it should be viewed as a major modification that can affect the value of your home and the ability to borrow against it.
In this article, we will explore some of the challenges you could face with spray foam insulation and equity release, how to avoid them, and include a real example from one of Equity Release Supermarkets’ customers.
What Are the Impacts of Spray Foam Insulation on Equity Release?
For lenders, it's about managing the risks associated with issuing a loan against a property, and some have decided that the risk is not worth it. Although spray foam insulation can be a great way to keep your home warm, it could reduce ventilation in the roof space. You're probably thinking, "Isn't that the point?" and you're right, but the problem is that as ventilation decreases moisture increases. This can, over time, damage specific structures in the roof, especially wood, and with a lot of homes having timber in their roof structure, it can significantly increase the risk profile for the lender.
The Importance of Disclosure
Homeowners need to disclose any relevant information about their property when applying for equity release. This includes information about any home improvements, such as spray foam insulation, that have been carried out on the property. Failure to disclose this information can lead to complications further down the line.
Failing to disclose could lead to delays in the equity release application process, and in some cases, it can result in the application being rejected altogether. This can leave homeowners in a difficult financial position, especially if they were relying on the equity release to fund their retirement plans.
A Real-life Example
Mrs & Mr Jones*, who sold a 35% share of their home via a Home Reversion Plan in 2006, illustrates the importance of disclosure. Her late husband arranged spray foam insulation for their home in 2012, but they did not inform the Home Reversion provider at the time.
When Mrs Jones tried to raise additional capital in 2022 for a holiday and to help fund lifestyle costs, she discovered that her existing adviser didn't advise on this type of product anymore, and that's how she found Equity Release Supermarket.
After a search on our website, Mrs Jones was able to quickly find one of our independent equity release advisers who used their knowledge to guide Mrs Jones through the process and help put her mind at ease.
The adviser worked with Mrs Jones to find a suitable provider, but they would only consider the application if the spray foam was removed. Mrs Jones received two quotes, one for £20,000 and another for £5,500. This led to additional costs and delays in the application process, but ultimately, she was able to raise the capital she needed.
How to Find Out More About Spray Foam Insulation
The Royal Institution of Chartered Surveyors (RICS) has produced an independent and comprehensive guide to spray foam insulation covering a broad range of scenarios. You can access the guide here.
If you are considering equity release and have had spray foam insulation installed in your home, it is important to disclose this information to your adviser. Equity Release Supermarket has a team of independent equity release advisers who can help guide you through the process and find the best solution for your needs.
*Real name of the customer has been changed to protect her identity