Understanding Equity Release if You Have Spray Foam
Do you own your own property and want to release some of your equity? You may think that this is a straightforward process whereby you speak to your mortgage provider and access cash, and it should be unless you have installed spray foam.
As RICS surveyors are advising all lenders that spray foam is detrimental to properties, no mortgage provider or equity release firm is willing to proceed with lending at this point in time. Don't despair, we've gathered all the information you need and shared some of the ways you can find a solution that works for you – read on to find out more.
What is Equity Release?
Equity realised is a way to unlock the cash in your home without having to sell and move. Many mortgage companies offer equity release to their customers once a certain portion of the mortgage is repaid and there are also equity release companies that specialise in offering this too. To successfully release some of the equity in your home you will need to apply and be approved.
Many people are choosing equity release as a way to navigate the UK cost of living crisis, but it can also be used for other large purchases such as weddings and second home deposits or as a debt relief method to help lower your monthly outgoings.
How Does Spray Foam Impact Equity Release?
If you have been considering equity release and are ready to apply, you may find your application is automatically refused if you have spray foam installed in your property. The current RICS guidance does not differentiate between open cell and closed cell spray foam, meaning that many homeowners can no longer access equity release solutions until RICS update their advice.
The good news is that it will be updated, the bad is that we do not yet know when that will happen. In practice, this means that unless you have photos of the area and certified moisture readings from before the spray foam was installed, you will not be able to proceed unless you take action to remove the spray foam.
Does The Type of Spray Foam Make a Difference?
The reason that RICS has issued guidance on spray foam is in order to highlight the issue of closed cell foam in residential properties. Closed cell foam works by setting into a rigid mass that does not let moisture in or out. This is problematic in residential properties as the walls need to breathe and allow moisture to escape so that mould, mildew and damp do not occur. Sadly, there have been cases of closed cell foam being used in residential properties by people who do not understand the intricacies of spray foam, resulting in damage to homes.
On the other hand, open cell spray foam is designed to provide an insulating layer that helps to keep the temperature right inside your home while allowing moisture to travel in and out of the brickwork. Unlike closed cell foam, open cell feels like a sponge when it is dry and does not harm the fabric of your property when it is installed.
What Options Do I Have if I Have Spray Foam?
If you have closed cell spray foam in your property you should make it a priority to have it removed at your earliest convenience. This is not just so that you can proceed with equity release, but it is also to protect your property from becoming damaged from having incorrect spray foam installed.
If you have open cell spray foam then you can either leave it in place and wait until the RICS guidance is updated and equity release firms will pay out with it in place, or you can choose to have it removed and move forward with your equity release before the guidance is updated.
At Countrywide Roofing & Insulation, we have had an influx of requests from clients to assess their spray foam and remove it so that they can release the equity stored in their homes. In these cases, we have provided a free assessment and detailed work plan for our customers to consider before agreeing on the most sensible way forward. If you are in the same situation then we are here to help you too.
What if My Spray Foam Was Government Funded?
Embarrassingly for the UK Government, many UK homeowners had spray foam installed in their properties via the Green Home scheme. However, the government has confirmed that they will not get involved in cases where a homeowner has been supported by the scheme, leaving many people in a worse situation than they were before accessing the grant.
However, if your spray foam installer provided you with moisture readings before they carried out the spray foam installation, you may be able to bypass the ban on spray foam equity release, so it's worth double checking the paperwork you were given. In most cases, as moisture readings were not a requirement of the scheme, the majority of homeowners will not have them.
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