Releasing equity by remortgaging means increasing your mortgage to borrow more than your current outstanding balance, turning the difference into cash. This is only possible if your property has increased in value or you have paid down a significant portion of your existing mortgage.
How Remortgaging to Release Equity Works
When you remortgage to release equity, you take out a new, larger mortgage on your property and receive the difference as cash:
Example: Home worth £300,000. Current mortgage £150,000. You remortgage to £225,000 (75% LTV). You receive £75,000 in cash and your new monthly payments are based on the £225,000 balance.
This is different from equity release, which is a specific product for over-55s with no monthly payments. Remortgaging to release equity is a standard mortgage process available to anyone who can pass affordability checks.
How Much Equity Can You Release?
The amount depends on your property's current value, your existing mortgage balance, and the maximum LTV the lender offers:
| Property Value | Current Mortgage | Max Remortgage (80% LTV) | Cash Released |
|---|---|---|---|
| £200,000 | £100,000 | £160,000 | £60,000 |
| £300,000 | £150,000 | £240,000 | £90,000 |
| £400,000 | £200,000 | £320,000 | £120,000 |
Common Reasons to Release Equity
- Home improvements: Extensions, loft conversions, new kitchens — improvements that increase your property's value.
- Debt consolidation: Combining high-interest debts into your mortgage at a lower rate. Caution: this secures unsecured debt against your home.
- Helping children buy: Gifting money for a child's mortgage deposit.
- Funding a business: Using equity for business investment or start-up costs.
- Major purchases: Cars, education costs, or other significant expenses.
Costs and Risks
- Higher monthly payments: You're borrowing more, so your payments increase.
- Early repayment charges: If your current mortgage has ERCs, these will apply if you switch before the deal ends.
- Arrangement fees: A new mortgage may have product fees of £500–£2,000. See our fees guide.
- Valuation and legal costs: Though many remortgage deals include free valuations and legal work.
- Risk of negative equity: If property prices fall, you could owe more than your home is worth — especially at high LTV.
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Frequently Asked Questions
- Is remortgaging to release equity a good idea?
- It depends on what you use the money for. Home improvements that add value can be a good investment. Debt consolidation can save on interest but extends repayment. Always consider whether the larger mortgage is affordable long-term.
- How much equity can I release from my home?
- Most lenders allow up to 80–85% LTV. Subtract your current mortgage balance from this figure to find the maximum you can release.
- Will I pay more interest if I release equity?
- Yes — your mortgage balance increases, so you pay interest on a larger amount. However, mortgage rates are typically much lower than personal loan or credit card rates.
- Can I release equity if I'm self-employed?
- Yes — self-employed borrowers can remortgage to release equity, subject to the same affordability checks. See our self-employed mortgages guide for details on income requirements.
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