Remortgage to release equity

If you currently have a mortgage, or own your property outright, you can remortgage your home which means getting a new mortgage, either with your existing lender or a new one. Even if your current mortgage has a duration of 30 years or more, you don’t have to stay tied to the same one for that length of time.

Remortgaging is common and can help you to get a better deal and take advantage of good rates. You can see it as re-evaluating your finances and finding the best deal to ensure you’re not paying more than you need to. Just like you might do with your utility bills.

How much equity is in your property, it’s current value and what kind of loan-to-value (LTV) percentage you want will all affect the kind of mortgage you can get. Working with an experienced, specialist equity release broker is the best way to make it simple and easy. Get started.

When you remortgage, you free up the equity in your home. Equity is the difference between how much of your property you’ve paid for, versus what you still owe. When you remortgage, you free up that cash that you've invested in your property. 

When you remortgage to release equity, lenders will assess you by looking at:

Your credit history: similarly to when you first apply for a mortgage, they’ll want to see your credit history to work out how much they’re willing to let you borrow. 

How much equity you have: Lenders will want to know how much money you want to release, and what you want to use it for. 

Your affordability: this means they’ll assess whether the loan is affordable for you by looking at your income and outgoings.

Most people remortgage to reduce their monthly mortgage payments. Generally, it’s a good time to remortgage when you’ve built up a good amount of equity and you’ve got something you want to pay for. For example: 

• Paying for home improvements

• To consolidate debts

• To buy a second home

• To help fund a child through university

• To pay for a wedding

• To help a friend or family member out with money

There are many reasons why you might want to remortgage to take out equity. Working with a specialist broker can help you to get the very best deal and help you to work through any other complexities that may impact your application, like bad credit or self-employment.

If you have equity in your property, remortgaging should be straightforward. If you have any other issues like bad credit, or you’re self-employed it can be more complex. 

Here’s how it should work: 

1. Work out your loan-to-value (LTV) by dividing the loan value by the value of your home and multiply that figure by 100. 

2. Work out what kind of loan you’re going to be able to afford based on your income and outgoings. Most lenders will let you borrow a maximum of 4x your income. 

3. Speak to a specialist mortgage broker who will know what lenders to approach. They’ll know which lenders are offering the best rates for your situation.

4. Your broker will create an application for you and get you a decision-in-principle (DIP).

5. Once your mortgage application is approved by the lender, you should get a solicitor and book a valuation on your property.

6. After you’ve signed all the paperwork and the property is valued, the mortgage will be fully complete. 

7. Your solicitor will change the charge to the new lender and organise release of the funds.

8. Your solicitor will receive the money from your existing lender and transfer it into your bank account. Ta-da, equity released!

Lenders have their own lending criteria, but generally if you want to remortgage for equity release, they’ll look at:

• How much equity you have: the more you have, the more willing lenders are to lend to you. 

• Your age: all lenders have different criteria when it comes to age, but some won’t lend to you if you’re over 75. Others have no age limit at all. 

• Your income and outgoings: A lender will want to know you can afford the loan. 

• Your credit history: The better your credit history, the more options you’ll have. 

• Your property type: they’ll look at how old the property is, its condition and anything else that affects their lending criteria.

Read more in our Guide: What Mortgage Lenders Look for in Mortgage Applicants.

Six months is the legal minimum requirement. But in some situations this minimum can be waived. For example if a property was part of an inheritance or when one family member is buying from another.

The more equity you have, the more lenders will be willing to consider you for a remortgage. But technically, you can remortgage to release equity as soon as you’ve built up any equity in your property.

Read more in our Complete Guide to Remortgaging.