Increasing numbers of over-55s are considering using the equity in their property to fund home improvements, according to reports from later life lending companies.
It is thought the lockdown and Covid-19 have driven the trend for renovating our homes or creating additional ‘office’ space. But with many people struggling to find the cash to make the improvements, it would appear growing numbers are looking at later life lending options – such as equity release – to pursue their plans.
Legal & General Financial Advice, a later life adviser, said enquiries relating to equity release for home renovations had increased by 134% this year.
Meanwhile, mortgage provider Hodge revealed 50% more people were taking out a Retirement Interest-Only (RIO) mortgage for home improvements this year. Both companies also reported a steep rise in the number of potential customers who were looking to gift money to family members. Hodge reported an 80% rise in enquiries in this area whilst Legal & General saw a 96% increase in interest from people who wanted to gift money to loved ones.
The trends are being attributed to changes caused by the pandemic as more people spend time at home and are able to focus on potential enhancements they could make. The rise in working from home has also led to an increase in demand for home office space. Legal & General flagged up research from The Good Home Inquiry which found 63% of people approaching later life saw home renovations as a priority but half of those aged 50 to 70 would not be able to carry out the renovations because they could not afford to do so.
Sara McLeish, CEO of Legal & General financial advice, said: “Over the past year we have spent more time in our homes than ever before, which has led to a rise in home improvements to make our homes as comfortable, enjoyable and functional as possible.
“As well as cosmetic improvements, as we get older it’s important our homes adapt as our needs change and renovations can be vital in improving accessibility.
“Sadly, many people are not able to undertake this vital work because they cannot afford it. Unlocking equity from the home is one possible solution for those who need extra money to make much needed improvements.”
The rise in gifting has also been driven by the pandemic. Research from Legal & General last year found 5.5 million parents expected to offer additional financial support to younger family members due to Covid-19, providing loved ones with an extra £1.9 billion. Legal & General said requests to unlock cash for the purpose of gifting may have come as parents and grandparents provided housing deposits following the Stamp Duty holiday. But it also suggested the spike in requests may also be an indication of how the older generation has been relied on as a vital source of regular financial support for those hit by the pandemic.
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