Remortgage to Release Equity

If you’ve owned a home and have been keeping up with your monthly mortgage repayments for a reasonable stretch of time, then it’s likely that you’ve built up a decent amount of equity for your property. This could be to a considerable degree considering the rate at which house prices have continued to rise.

By choosing to remortgage your property you can release this equity which is tied to your home, leaving you with access to that accumulated extra cash. Homeowners commonly do this for essential reasons such as paying off pressing short-term debts. However, others see it as an opportunity to renovate their property and so further increase its value. Either/or, whether remortgaging to release equity is a good idea depends entirely on your personal situation and financial circumstances.

This can be a tricky conclusion to come to, and even trickier to actualise. It’s for this reason why we strongly recommend hiring an expert mortgage broker to help navigate and guide you through the entire process, from start to finish. Here at The Mortgage Genie we have helped plenty of our UK clients out by finding the best remortgaging to release equity solutions for them. If you’re interested in joining the many among our success stories then you can contact us at 01915809890 today.

Regardless of the service we can provide for you, there’s a lot to grasp when it comes to remortgaging to release equity. To help you familiarise yourself with the details we’ve put together this piece which covers all the salient information that you need to know and understand. We will go over:

What is equity?

Equity represents a portion of the total property value that the homeowner controls, as opposed to that which is controlled by the mortgage provider. In essence, it is how much of the home the borrower owns outright. To demonstrate, if you owned a house that had a market value of £250,000, and you only had £50,000 of the mortgage left to pay off, then you would have £200,000 worth of equity. Naturally, if you’d finished paying off your mortgage in full, then your equity would be equal to the entire property value. In this context, that would be £250,000.

The volume of equity also factors in the deposit you put down for the house when you initially purchased it. Meaning, if you put a larger deposit forward, then you will have more equity from the get-go than if that sum was smaller. Another influence is what the general market determines your home’s value to be. If your property’s value increases, then this means that so too does how much equity you have.

How does remortgaging to release equity work?

Remortgaging to release equity works a little differently from how you would normally take out a mortgage. This is, evidently, because you won’t be taking out a mortgage loan for a property that you want to purchase, rather, you’ll be increasing the size of the one that you already have. It’s often the case that people who remortgage to release equity have paid off a substantial amount of their mortgage, and so inherently have a sizable amount of equity.

If you plan to remortgage to release equity then the first step would be for us to approach your existing lender, or a new one if preferred, and ask them to increase your mortgage and access some of the equity you want to release. Say, for instance, that you wanted to release £50,000 equity on that house worth £250,000 but already had £100,000 outstanding, then you would be asking for a remortgage totalling at £150,000.

Can I remortgage to release equity?

Yes, you can remortgage to release equity. Bear in mind, however, that you will be subject to the typical scrutiny that lenders carry out when considering usual mortgage applications. Providers will, chiefly, carry out an affordability check and look to see your credit score alongside whether you’ve ever had a court county judgement, an IVA, adverse credit, or if you’ve failed to meet payday loans or filed for bankruptcy in the past. All of these factors will influence your eligibility.

Likewise, the amount of equity you are wanting to release, and for what reason, will be considered in their assessment. It’s integral to be sure that the reason for your equity release is necessary and valid. Moreover, you should consider what loan-to-value (LTV) ratio you want to go with. Mortgages with a high LTV ratio, such as 90% LTV mortgages, 95% LTV mortgages, and 100% LTV mortgages all come with relatively higher interest rates and lenders can possibly reject you if they don’t deem you suitable. On the other hand, if you were to switch to a lower LTV mortgage then you would be effectively lowering your monthly repayments.

To get an idea of your current financial suitability before you apply you can use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you spot possible mistakes and fraudulent activity so that you can keep on top of any problems without delay. The trial and subscription can be cancelled at any time.

How do I remortgage to release equity?

If you don’t have any of those aforementioned variables on your file which work to negatively affect your application, then remortgaging is a fairly straightforward process. Otherwise, it can turn out to be a bit more complicated.

There are decisions you should make relating to the process before you go ahead with remortgaging to release equity. These include being firm on whether you want to stick with your current provider or go with a new one, what loan to value ratio & mortgage type would suit you, and whether you’ll be able to afford a new loan based on your income. As a general rule for this latter point, providers are typically willing to lend you around 4x your annual income. When considering the finances of remortgaging, it’s always of significance to take into account the usual fees and charges.

Subsequently, you should then consult a specialist mortgage broker who will find out which lenders and deals are most suitable to your individual situation and present you with them. Your broker will then make a remortgage application for you before getting a decision-in-principle (DIP). If all goes well and you are approved, the lender will typically arrange a valuation to be carried out on the property and the solicitor will arrange for the funds to be released. The standard paperwork will follow this before everything is finalised, where you will then eventually receive the sum of your equity via bank transfer.

Why should I remortgage to release equity?

The fact that remortgaging to release equity is quite a big financial decision should not be understated, it’s certainly not something you decide on in an afternoon. If your monthly repayments increase and you can’t afford to keep up with them, then you could risk losing your house. That being said, if you are confident that that won’t be the case, then there are multiple reasons why you may think of remortgaging to release equity.

As we mentioned at the start of this article, you could use the equity you have accumulated to renovate the property or make repairs. Making changes like adding a conservatory work to increase a property’s overall value to a considerable degree. Moreover, it could be that you have a child who is about to enter university, releasing equity is a way of giving you the capacity to substantially provide the relevant funding. You could also choose to buy another property, perhaps one from abroad if you desire it. If, however, things aren’t looking so favourable and you have debts piling up, then an equity release would be a completely legitimate way of consolidating them.

How soon can you remortgage to release equity?

As mentioned, you can remortgage at any time. Although, if you want to remortgage to release equity then typically the minimum requirement is six months. Add to this, obviously, that you’re required to have some equity. Having said this, if you had inherited the property from a family member who had passed, then this six month term may not apply. This is likewise the case if one relative is purchasing the house from another.

The typical minimum lender requirement is worth knowing, albeit, it’s not recommended that you release equity so soon. Why? Because if you are remortgaging to release equity, then it will be better for you if you take time to foster a lot of positive equity so that the sum is more material. This will also make lenders more likely to accept your application, provided your case is backed by solid reasoning. In the end, what decision is right for you is determined by your individual circumstances, and sometimes remortgaging is a necessity.

How long does it take to remortgage and release equity?

Typically, it can take a month or two, to remortgage to release equity. Namely, between four to eight weeks. This includes every part of the remortgaging application process, up to when it is ultimately finalised. If you’re eager, then this may sound like a decent amount of time. However, the process can move faster than you initially anticipated, especially if you do hire a mortgage broker that can expedite procedures. So, make sure that you give yourself enough time to organise all of your finances before they are needed.

Here at The Mortgage Genie we have a comprehensive understanding on how to get a mortgage and are dedicated to helping people secure loans of all types. We hope that this article has answered all of your questions and cleared up any ambiguities surrounding remortgaging to release equity.

Each day we aid a growing number of people in finding housing happiness by helping them to get their perfect mortgage product and conducting them through every step of the way. If you’re in need of a team of expert mortgage brokers then look no further. Give us a call at 01915809890 and we’ll get you on the path towards owning your dream property! And why not see how much you could borrow up to today by using our mortgage calculator?

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The Mortgage Genie Limited is Registered in England and Wales with Company Number 9803176. The Mortgage Genie Limited is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.


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