Stamp duty bills alone can amount to tens of thousands of pounds, often outweighing the cost of a loft extension. Here, we look at how much this could set you back, as well as some of the different ways to fund home improvements.
Loft conversion cost
Converting your loft is often one of the easiest and cheapest ways to boost the square footage of your home. Depending on the structural requirements and the floor area and access, costs typically range from around £20,000 up to about £60,000. Costs will be higher if you’re making significant changes to the size of the roof space and are adding a bathroom.
Increased property value
Research by Nationwide Building Society found that adding a loft conversion that includes a bathroom and a double bedroom would typically add around 20% to the value of a three-bed, one-bathroom property.
Not all loft conversions will need planning permission, but it will be required if you’re extending or changing the roof space and it exceeds certain limits and conditions. Check on the Government’s planning website for more information on the rules.
Ways to fund a loft conversion
There are several different ways for homeowners to pay for a loft extension.
Many people cover costs using savings, but for those that don’t have a large lump sum available, there are other options. Remortgaging is a popular way to free up funds, although you’ll need to be certain that you can afford higher mortgage payments.
If you’re an older homeowner, remortgaging isn’t always straightforward, as many lenders impose maximum age limits. They will also want to be able to demonstrate that you’ll have a stable income in retirement so that you will be able to meet monthly mortgage payments when you stop work.
How equity release could help
Older homeowners, those aged 55 or above, also have the option of using equity release to pay for a loft conversion, which involves unlocking some of their property wealth. According to research from SunLife a quarter of baby boomers are considering equity release to pay for a property makeover.
Release property wealth
A total of 38,912 households aged 55 and over used equity release products to unlock some of their housing wealth in the first half of 2018, according to figures from the Equity Release Council, the trade body for the equity release sector. This included 21,490 new plans agreed, up by 28% from 16,805 in 2017.
David Burrowes, chairman of the Equity Release Council, said:
“Equity release provides financial help for consumers in a wide range of circumstances, including some looking to pay off interest-only mortgages and others wanting to make home improvements or adaptations and fund social care needs in the comfort of their own homes.”
How it works
With equity release, rather than re-paying what you owe monthly, interest rolls up over time and is then repaid, along with the lump sum released, when you die or move into long-term care. Steve Wilkie, managing director of equity release specialists Responsible Life, said:
“Historically, equity release has been driven by holidays and homes; with two-thirds of our customers naming improvements to the home and a third listing holidays as the main usage.”
Get professional advice
However, this type of scheme won’t be right for everyone, as it may reduce the value of your estate and could affect your entitlement to certain means-tested benefits, so it’s vital to seek professional equity release advice if you’re considering taking this route to fund a loft extension or any other home improvements.
An adviser can provide you with a personalised illustration and recommend the most suitable plan for you.
Try our free equity release calculator now and see how much tax-free cash you can release
By taking money out of your property now, a Lifetime Mortgage may reduce the value of your estate. A Lifetime Mortgage may also affect your entitlement to means-tested benefits, but an adviser can walk you through the impact of this before you decide to proceed.
The Telegraph Equity Release Service is provided by Responsible Equity Release. Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490.
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Information correct at date of publication.