Remortgage to Release Equity

Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Remortgage to Release Equity, Vantage Mortgages

Remortgage to Release Equity

Adam Messer talks us through the process of remortgaging to release equity. 

Can you remortgage to release equity?

Just to clarify, we’re talking today about remortgaging to release equity rather than equity release mortgages. An equity release mortgage is for someone of a certain age who wants to release money from their home, and that’s a different thing.

If you do need one of those, feel free to get in touch because we can help you with that separately.

In terms of remortgaging to release equity, this just means taking extra money out of your house to do something with. We would normally do that when your mortgage is due for renewal.

Let’s say you’re on a fixed rate, for example. When that ends, we can move lenders and borrow more from the new lender than we owe the old lender – that’s releasing equity. You can use that money for any legal purpose, other than business-related ones.

Can I remortgage early to release equity?

You can, but if you’re partway through a fixed rate you’ll probably have a penalty to come away from that mortgage early. You may still be happy to pay that, or there might be other options to look at, such as a second charge mortgage or a secured loan. Those are options for anyone who wants to release equity before their fixed rate finishes.

What are the typical reasons for remortgaging to release equity?

There are so many, really. Some are more common than others, and the most popular is home improvements. We’ve got a whole section specifically on this on our site, so have a look at that.

You might want an extension or a new kitchen, bathroom, carpets, curtains, painting, driveways, gardens… we’ve seen it all. We can release money as part of your remortgage process to get those jobs you want done. It might be £5,000 for a new driveway or £50,000 for a big extension – or more.

We can also remortgage to release equity for debt consolidation. We have to be careful about debt consolidation – there’s a section on the site about that as well. Specifically, not all debts should be consolidated onto a mortgage. But if you’ve got loans and credit cards you would like to repay, you can add them onto the mortgage.

I’ve helped people release equity to get married, although I’m not sure I would necessarily add that onto the mortgage secured on my house. Plus things like holidays and cars – you can add money onto the mortgage for anything you like.

I don’t really like adding on short term things that depreciate in value. If you add money on to your house for a new car that you’re going to want to change in five years, you’ll still be repaying that debt on your mortgage over 25 years.

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How do I remortgage to release equity in my property?

We tend to try and time things around when you finish your deal with your current lender and are thinking about moving to another one. That’s when we’ll do this process.

We just need to see how much you can borrow. We’ll take into account your income and outgoings just like any other mortgage, plus your current property value. It’s got to be based on the current value, not what it will be after your home improvements – lenders know that if you take the money, you might suddenly decide to buy a Porsche instead.

Once we know how much we can borrow we check it fits with the Loan to Value, keeping some equity in your property. We apply to a new lender to borrow that much and then there’s a legal process to go through. When it’s ready, the new lender will release the money, pay off the old lender and give you what’s left. That’s the basic process.

How easy is it to remortgage to release equity? How long does it take?

It’s pretty easy, normally, unless you’ve got other complications such as bad credit. In that case it might take us a little longer to find the right lender, and some extra questions may be asked depending on your situation.

Generally it’s not going to take very long. We normally go from start to finish in four to six weeks.

How much can I remortgage to release equity?

Affordability is the same whether you’re remortgaging or buying a new property. The amount you can borrow is dependent on your income, your outgoings and whether you have children etc.

But we also need to factor in your property value as well. We can’t go above 95% of the value. The lender will assess that when we do an application. They will send out their surveyor, who will either agree or disagree with our estimated value.

Let’s say you could afford to borrow £400,000. If your property is only worth £350,000, you can’t borrow £400,000. At 95% you can only borrow £330,000 on that property. We need to keep a little bit of equity back.

The higher the borrowing compared to your property’s value, the lower your equity figure and the higher your interest rate is going to be.  But generally up to 85% or 90% Loan to Value is fine.

If you’re consolidating debt, you might not be able to borrow that much. Lenders might restrict it to 80% or 85% Loan to Value.

How can a mortgage broker help me remortgage to release equity?

Ultimately it’s just about finding the best solution for your individual circumstances. If you’ve got anything remotely complex in your situation, it’s not a job for a comparison site.

Also, some lenders Mortgage Brokers have access to aren’t on those websites. We can save you hours of trawling the internet to find the best deal and which banks will lend you the amount you need. Make a quick phone call to us and we’ll know fairly quickly what will work for you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments. 

You may have to pay an early repayment charge to your existing lender if you remortgage.

If you are considering releasing equity from your home, you should consider all options available before equity release.