How Do I Remortgage to Release Equity?

What is remortgaging to release equity & how does it work?

Get expert advice & compare mortgage deals with the experts at Later Life Finance to make an informed decision.

Author Paul Murphy Later Life Finance

Can you release equity when you remortgage?

Yes, If you’ve built up some equity in your home, you can release money from your home through remortgaging. The options include standard, lifetime and retirement mortgages, depending on your age and income.

However, you cannot have both a standard and a lifetime/retirement mortgage, you must choose one or the other.

Releasing the equity in your home as cash via a mortgage can be done through several methods, each with its own advantages and considerations.

For many homeowners, equity release is a popular solution. However, there are several important areas to consider before proceeding with a lifetime mortgage.

Key remortgage points to consider:

Equity: The amount of your home you own outright after any mortgage lending
Remortgage: Releasing equity on a new or existing mortgage

LTV (Loan-to-Value): The percentage of your home’s value borrowed.

Interest Rates: The cost of borrowing, which impacts on monthly payments.

Fees: Various charges associated with remortgaging, such as valuation fees, broker and legal costs to consider.

Benefits of remortgaging to release equity

Access to tax free cash: Fund home improvements, debt consolidation, or other financial goals.
Flexible Monthly Payments: Potentially reduce your monthly mortgage costs.
Switch to a Better Deal: Take advantage of lower interest rates or improved mortgage terms.
Greater Security: Lifetime mortgages can offer greater financial security since there is no fixed end date for settlement of the mortgage

How does remortgaging work to release equity?

When you remortgage to release equity this provides extra cash to meet your financial goals.

In this example, raising an extra £30,000 on a property valued at £400,000 with an existing mortgage of £100,000, the new mortgage is for £130,000 enabling home improvements, holidays and a cash emergency fund to cover any unforeseen spending needs.

This provided our clients with the extra financial security and peace of mind they were looking for, with the added flexibility to maintain payments on the new mortgage.

How long does it take to remortgage and release equity?

It takes around 6-8 weeks to remortgage your home to release equity.

When considering timescales, how long a lifetime mortgage takes to arrange ultimately depends on whether you have an existing mortgage to settle or not, and whether any title changes are required.

For an expert review of your specific options, timescales and a personalised quotation, get in touch with us on 0800 2465228.

Remortgage to release equity calculator

Our remortgage to release equity calculator will help you get started to find the right solution for your needs to make an informed decision on the best way forward.

Our calculator is free to use and you can also book a free review of all your options with our expert advisers. Get started below!

What are the next steps to releasing equity from my home?

Later Life Finance can help you navigate all your remortgage options to safely release equity from your home.

As a broker, we review the whole mortgage market to help you compare plans, rates and deals when considering remortgaging your home.

Get in touch with our experts to understand your remortgage options to unlock tax free equity from your home on 0800 2465228.

Get free remortgage quotes...

Equity release FAQs

What is the downside to equity release?

The main downside to equity release is the effect of compound interest on the most common type-the lifetime mortgage. However, this interest effect can be avoided or reduced with voluntary repayments. The equity release council included voluntary repayments as a requirement for lenders to meet their strict codes of conduct. The ability to make voluntary, penalty-free partial repayments was made a compulsory feature for all products to meet Equity Release Council standards from March 2022.

Do I need an advisor for equity release?

Prior to finalising your decision on equity release, it is crucial to seek financial guidance with a qualified equity release adviser. Discussing your plans with an independent equity release adviser will enable you to compare the whole market, and your adviser will identify the most suitable solution to match your specific circumstances. Additionally, should you opt to proceed with equity release, it is essential to obtain legal advice. Your adviser will be able to suggest an independent solicitor who specialises in equity release.

What does Martin Lewis think of equity release?

While Martin Lewis does not provide a direct endorsement for equity release, he acknowledges that under specific circumstances, it can be a viable solution to access funds tied up in your home to meet living costs and provide financial security. Where downsizing has been ruled out, for example, Martin Lewis has a balanced view on the concept of equity release and it's benefits to homeowners seeking extra funds in later life, and advises independent advice on equity release is obtained.

Is there a catch to equity release?

Equity release provides you with a cash lump sum or a drawdown facility to take the cash over a longer timeframe. The "catch" with equity release is that the money released from your home, plus interest will need to be repaid when the property is eventually sold. With a Lifetime Mortgage, you will owe the money borrowed plus the loan interest accrued. If you make voluntary repayments to the mortgage this will help reduce the amount of interest repayable on the mortgage, and will help maximise any inheritance your beneficiaries may receive.

How long does it take to arrange equity release?

It takes between six and eight weeks for an equity release application to complete and to receive your funds. The timescale depends on whether you have a mortgage to repay from the money taken, and whether there are any legal processes which may delay the process, such as moving home or changing the title.

Do you need an LPA for equity release?

A lasting power of attorney, or LPA is not required to setup an equity release plan. However, having an LPA in place is important to ensure access to further funds from a drawdown plan if you ever lose capacity to make your own decisions, or cannot sign your wishes for physical reasons, such as a stroke. If you have not set up an LPA and it is required, the Court will need to appoint a deputy for you. Planning ahead is prudent to ensure you have arranged such measures in case an LPA is required in the future, and this can save a great deal of stress if and when the time comes to use the LPA.

Can you use equity release for anything?

Equity release funds are tax-free and can be used for anything you wish (providing any existing mortgage is repaid from the funds). Popular uses of equity release funds include repaying mortgages and unsecured debt, home improvements, a cash boost, purchasing second homes, and helping family with a financial gift.

What is the most popular form of equity release?

Lifetime mortgages are the most popular form of equity release and provide the flexibility to move home and make voluntary payments, if preferable. Equity release customers unlocked £1.6 billion in property wealth in Q2 of 2022. (Equity release council)

how long does equity release take

An equity release application should take around eight weeks until you receive your equity release funds. This depends on whether you have an existing mortgage to repay and if any changes to the title are required, which can increase the timescale to arrange.

What is the typical interest rate for equity release?

In July 2023 the lowest Equity Release rate is currently 6.03% (Monthly Equivalent Rate) fixed for life. The highest interest rate in the market is currently 8.64% (Monthly Equivalent Rate).