Remortgage to Release Equity

If your home has increased in value or you’ve paid down your mortgage over the years, you might have equity sitting in your property. 'Equity' is essentially the portion of your home that you truly own (so your property value minus your outstanding mortgage balance).

Remortgaging to release equity can feel like a tempting way to fund home improvements, consolidate debt, or even invest. But it’s not a decision to take lightly. In this guide, we’ll break down how it works, the benefits, risks, and key considerations.

1. What Does “Remortgaging to Release Equity” Mean?

Simply put, it means taking out a new mortgage on your home for more than you currently owe. The difference between the new mortgage and your existing balance is released as cash.

You can use this cash for almost anything: home improvements, big purchases, or debt consolidation, but remember, it increases your mortgage debt.

2. How Much Equity Can You Release?

Lenders typically allow you to borrow up to 75–90% of your property’s current value.

• Example: Your home is worth £300,000, and you owe £150,000. At 80% LTV, you could borrow up to £240,000. Subtract your existing mortgage (£150,000), and you could release £90,000 as cash.

💡 Lenders will look at your income and affordability, not just your equity.

3. Reasons People Remortgage to Release Equity

• Home improvements: Kitchen, bathroom, extensions, and other renovation projects.

• Debt consolidation: Replace high-interest loans with a lower-rate mortgage to reduce your monthly payments.

  Caution: By consolidating your debts into your mortgage you may be spreading your debt out over a longer period of time. This means that in the long-run you’ll end up paying more in interest.

• Purchase another property: Some may use funds as the deposit for a buy-to-let property or a second home.

• Life events: Weddings, education costs, or major family expenses.

4. Can You Remortgage Early?

Yes, but there may be early repayment charges depending on your current mortgage deal. Some lenders allow flexible overpayments or early exit without penalty.

If your current deal still has time remaining, you may be better off applying for a ‘further advance’ with your existing lender. A further advance is effectively an additional part of your mortgage, or a “top-up.” However, it will have its own rate and terms, based on the market conditions at the time of application.

5. Who should I remortgage with?

You can stay with your existing lender or switch to a new one. Consider:

• Interest rates

• Fees (arrangement, valuation, legal)

• Flexibility

6. What About Bad Credit?

If your credit score has taken a bit of a hit since you applied for your existing mortgage, don't panic. Even if your credit isn’t perfect, you may still be able to remortgage, though your options may be more limited, rates higher and your borrowing power restricted.

7. Protecting Your Mortgage

Whenever you increase your mortgage, it’s a good idea to review your mortgage protection options: life insurance, income protection, or critical illness cover.

Final Word

Remortgaging to release equity can be a smart financial move if you plan carefully and understand the implications. Make sure your new mortgage works for your current budget, goals, and risk tolerance.

📩 Need guidance? Our team can assess your situation, explore your options, and help you choose the best lender and deal. Book a free Intro Call here to get things moving.