Is drawdown equity release better for home improvements?

Often yes. A drawdown plan sets up a total facility and lets you draw funds in stages as works progress. Interest only accrues on the amount drawn, not the total facility. For phased improvement projects, this is usually more cost-efficient than taking a lump sum upfront.

Will home improvements increase my property value and offset the equity release cost?

Some improvements — kitchen renovations, bathroom upgrades, extensions — can increase property value. Energy efficiency improvements may also increase value as EPC ratings become more important. However, improvements should not be taken for granted as an offset — the equity release cost must be affordable independently of any value increase.

Guide

Equity Release for Home Improvements

Q: Can I use equity release for home improvements?

Yes. Home improvements are one of the most common uses of equity release, with no restrictions on what the funds can be used for. Drawdown plans are often well-suited to staged works, as you only pay interest on what you actually draw down.

Your home may need work — a new bathroom, an adapted shower room, a kitchen renovation, a new roof, or an extension. If your income does not stretch to funding it, but your home has significant equity, equity release can bridge the gap. This guide explains how it works for home improvements and why the drawdown structure often suits this use case particularly well.

What kind of improvements do people fund with equity release?

There are no restrictions on how equity release funds are used. In practice, the most common home improvement uses fall into a few clear categories:

Adaptations for mobility and ageing in place: Wet rooms, walk-in showers, stairlifts, level-access bathroom conversions, widened doorways, ground-floor bedroom conversions. These improvements often allow people to remain at home longer and more comfortably, and in some cases delay or avoid the need for residential care.
General renovations: Kitchen replacement, bathroom upgrade, new windows, external rendering, new roof or roof repair. Properties that have been lived in for decades often need significant reinvestment to maintain condition and value.
Extensions and conversions: Extending the living space, converting a garage or loft, adding an annexe. These can increase both liveability and market value.
Energy efficiency: New boiler, insulation, solar panels, heat pump. These reduce running costs and improve EPC rating — increasingly relevant as older properties face scrutiny under evolving energy efficiency requirements.
Garden and access: Garden adaptations, ramps, patio improvements, external lighting for safety. Often overlooked but important for daily quality of life.

Why drawdown often works better than a lump sum for home improvements

A drawdown lifetime mortgage sets up a maximum facility — say, £60,000 — but you only draw what you need, when you need it. Amounts held in the reserve but not yet drawn typically accrue no interest.

This matters significantly for staged projects. If the bathroom renovation is happening in month one and the kitchen in month six, interest only accrues on the bathroom money for those six months before drawing the kitchen funds. A lump sum taken upfront would have interest compounding on the full £60,000 from day one.

For multi-phase improvement projects — which most substantial home renovation projects are — drawdown can meaningfully reduce the total interest cost over the life of the plan. The arithmetic is simple: interest only runs on what you have actually used, not on funds sitting in reserve.

Drawdown also provides flexibility if project costs change. If the kitchen renovation comes in under budget, you draw less. If an unforeseen problem is discovered mid-works, the reserve is available without going back to the lender for more.

See: What is drawdown equity release?

Will improvements increase my property value?

Some will. A well-executed kitchen or bathroom renovation typically adds value to a property that was previously in need of work. Energy efficiency improvements are increasingly valued as EPC regulations evolve and energy costs remain significant. A loft conversion adds square footage that the market generally prices positively.

However, improvements should not be assumed to offset the equity release cost entirely. Some improvements — particularly accessibility adaptations — add quality of life but not market value in any straightforward sense. The decision to fund them through equity release should be based on their value to you, not solely on an assumption of property value recovery.

A rough rule of thumb: improvements that bring a property up to local comparable standards tend to maintain or increase market value. Improvements that make the property unusual or overcapitalised for the local area may not recover their cost in sale price. Works that keep the property habitable and in good repair (roof, boiler, windows) tend to preserve value rather than create it.

Grants may be available for some improvements before equity release is considered. The Disabled Facilities Grant (from local authorities, up to £30,000 in England) covers adaptations for independent living. Energy company obligations fund insulation and heating improvements for qualifying households. These are worth investigating first. See: Alternatives to equity release.

Worked example

Situation: David and Anne, both 73, own their home outright (worth £420,000, no mortgage). The bathroom needs replacing and full adaptation for David’s mobility needs. The kitchen is dated. They also want to improve garden access. Total estimated cost across three phases over 18 months: £45,000.

Structure: Drawdown lifetime mortgage with a £50,000 facility. Draw £18,000 at completion for the bathroom. Draw £20,000 six months later for the kitchen. Draw £7,000 twelve months later for the garden.

Interest: Interest only accrues on what has been drawn. For the first six months, interest runs on £18,000. From month 6 to 12, on £38,000. After month 12, on £45,000. Total interest in the first 18 months is significantly lower than if £45,000 had been taken as a lump sum on day one.

Reserve: £5,000 remains in the reserve for contingencies. It accrues no interest unless drawn.

This example is illustrative only. Actual LTV ratios, interest rates, property values, drawdown terms, and project costs vary. These figures should not be relied upon as a guide to your own situation.

Getting quotes before deciding how much to release

Before applying for equity release to fund home improvements, get detailed quotes from contractors. The amount you release should be based on realistic costs, not estimates or rough figures. Getting three quotes for major works before finalising the facility size is sensible for two reasons:

It avoids releasing more than needed — which increases the compound interest cost from day one even if the reserve is not drawn immediately.
It avoids releasing less than needed — which creates a funding gap mid-project and requires either finding alternative funds or renegotiating the equity release plan.

Build in a contingency. Renovation projects routinely encounter unexpected costs — hidden damp, outdated wiring, structural surprises. A 10–15% contingency on top of quoted costs is typically sensible for anything beyond cosmetic redecoration.

Planning permission and building regulations

Some improvements require planning permission or building regulations approval before or during works. Extensions, loft conversions, and structural changes typically fall into this category; like-for-like repairs and internal alterations often do not, but the rules are specific to the work and the property.

Equity release funds can be released before planning permission is granted — the lender does not control when you spend the money. But the works themselves must comply with all applicable requirements, and unpermitted work can create problems when the property is sold. Your contractor and solicitor can advise on what approvals are needed for specific projects.

The value of adapting your home to age in place

Beyond the financial calculation, there is a broader consideration. The cost of funding home adaptations through equity release may be significantly lower than the long-term cost of residential care if an unsuitable home is what eventually forces the move. A £20,000 investment in a wet room and stairlift is a different order of magnitude from the £50,000–70,000 annual cost of residential care in much of the UK.

People who adapt their homes to their changing needs typically remain at home longer and with greater independence. The equity release cost of funding those adaptations needs to be weighed against that outcome, not just against the direct financial return from the improvements themselves.

For more on this, see our guide to equity release for care fees, which covers the relationship between home adaptations and care planning in more detail.

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Reviewed by Chris, CII-qualified equity release specialist · Last reviewed July 2026