From clearing an existing mortgage to making a large purchase, there are many reasons why you might consider accessing wealth tied up in your property. If you have considered downsizing but you’d prefer to stay in your home, you may consider releasing funds held in your property to make home improvements. Whether you’ve always wanted to update your space or you need to make changes for access needs, this article will consider what releasing equity for home improvements could look like in 2026.
What home improvements could you make?
Whether you want to redecorate your home or pursue the dream of open-plan living, there are plenty of ways to transform it to suit your needs.
For some homeowners, this may require more substantial changes, such as extending the property, transforming underused areas, or improving the layout of their home.
But improving your home doesn’t have to involve major building work. Smaller changes can make a big difference, helping to create a home that you can feel comfortable in for years to come.
You could:
- Make accessibility tweaks - this could mean adding handrails, improving lighting or replacing steps to make your home more accessible without the disruption of large changes.
- Upgrade your storage - you could make better use of existing space by installing built-in cupboards or shelving.
- Refresh your rooms - sometimes a room just needs a little updating to fit your style with new wallpaper, carpets, or furniture.
- Increase energy efficiency - by upgrading windows, improving insulation, or updating heating systems, you could make your home more energy-efficient, helping it retain heat during the winter months.
Funding your home improvements with equity release
Equity release can be a valuable way to fund home improvements. For some homeowners, using the wealth tied up in property is the best way to invest in their home and make changes that improve quality of life.
Here’s an illustrative example of how equity release can fund home improvements:
After losing her partner, Julia found herself in a difficult financial situation. Together, they had been planning on renovating their home to make it more accessible for Julia, but without her partner’s income, it seemed nearly impossible to complete the work.
While looking for a financial solution, Julia discovered equity release and decided to book an appointment with an adviser. They talked her through the process and how equity release could work for her.
In the end, Julia chose to release equity, accessing an initial lump sum of £60,000 to fund her home improvements, as well as retaining a drawdown facility of £90,000 that she could use in the future.
This is a fictional example based on a real-life scenario used for illustrative purposes only. Exact figures should not be relied upon as every equity release case is unique.
It’s important to note that equity release is not the only option for funding home improvements. You could also consider borrowing on an existing mortgage, taking out another type of loan, or using existing savings. If you’re unsure which option is best for you, speak to an equity release adviser registered with the Equity Release Council. They’ll help you find the right solution for your needs and will only recommend equity release if they believe it will benefit you in the long term.
Important factors to consider
Before releasing equity, there are many different factors you must consider. While you’ll need to discuss your options with a qualified adviser, knowing the key advantages and disadvantages can help you prepare for those conversations.
Benefits:
- You’ll receive a tax-free lump sum to spend however you choose.
- Providing you choose a Lifetime Mortgage from a member of the Equity Release Council, you will have a no-negative-equity guarantee. This means you will never owe more than the value of your own home.
- All lenders allow you to make optional repayments of up 10% of the original loan to help reduce the build-up of interest on your loan. If you would like to make voluntary payments, speak with your adviser.
- You can choose between a lump-sum and a drawdown product, depending on your situation. With a lump sum, you will be able to access all the money you release at once, whereas a drawdown will allow you to leave a portion of your release in a reserve facility to access later.
- Unlike other equity release options, a Lifetime Mortgage will allow you to retain full ownership of your home.
Potential drawbacks:
- A Lifetime Mortgage may affect your entitlement to means-tested benefits and will reduce the value of your estate.
- You must be a UK resident and homeowner over 55 years old. If there are multiple homeowners, the youngest borrower must be over 55.
- The interest on a Lifetime Mortgage will compound, meaning the amount you owe will increase over time. The interest rates will depend on your age, your home’s value, the type of plan you choose, and the market rates at the time of your release.
- Be aware that you could incur additional costs in the equity release process, including advice, solicitor and lender fees.
- If you wish to move home, your new property must be approved by your lender.
There are many reasons people decide to release equity. Using the wealth tied up in your property is one way to reinvest in your home and enjoy improvements that fit your lifestyle. If you think equity release could help you achieve your goals, talking with an equity release adviser is the first crucial step on your journey.
