Want to learn more about the release equity mortgage process?
Our remortgaging experts have written this step-by-step guide for homeowners:
Obtain a property valuation
With most lenders offering between 20% and 60% of your home’s value with equity release arrangements, it’s important to begin by getting a reliable property valuation.
While you can use online estimators, we recommend contacting independent surveyors for a more accurate valuation of your home.
Evaluate your equity requirements
The next step to releasing equity is to determine exactly how much equity want to access.
Whether there’s a certain debt you want to pay off, or a special trip you want to go on, we recommend using an equity release calculator to help you understand what’s possible with your plans.
Check the terms of your current deal
Are you at the start, end, or middle or your existing mortgage arrangement? If you’re still within your fixed-rate period, there may be early repayment charges (ERCs) to take into account before you can remortgage.
Contact a remortgage advisor
With so many lenders and deals to explore, speaking to a remortgage advisor can help to simplify your options and provide access to exclusive deals.
They can also simplify complex terms, and help you to determine if a product transfer or switching to a new lender is the most appropriate choice for your specific circumstances.
Decide on a deal
When choosing the right deal, there are many factors to consider alongside the more obvious ones, such as the lender and interest rate.
This includes product fees, ERCs, exit fees, and valuation fees.
By seeking expert advice to understand each option, you can form a clear idea of which mortgage deal is the most suitable.
Apply for the remortgage
Like any mortgage application, you’ll need to supply your chosen provider with the relevant information, including your income, credit history, and property details, alongside how much equity you want to release.
The process of releasing equity from your home can take between four weeks to a couple of months to complete.
For that reason, we recommend contacting a remortgage advisor six months before your existing deal is due to end.
Speak to a solicitor
To release equity in the UK, you’ll need help from either a solicitor or conveyancer.
They’ll ensure all legal aspects of a remortgage are handled correctly, and work to protect your interests by checking that you fully understand the related risks, rewards, and obligations.
Switch deals and receive the equity
Once your solicitor has finalised the paperwork, your new lender will pay off your old mortgage, set up your new arrangement, and transfer the approved amount of equity into your bank account.
After that, you’ll only make repayments on the new deal.
Is your mortgage finishing in the next six months?
Reach out to our team today to begin reviewing your options, or to ask a question about how to remortgage to release equity.
What is equity release when it comes to your remortgage?
Remortgage and equity release is a type of loan arrangement secured against the equity (cash value) you’ve built up in your home.
Eligible only for individuals that meet the criteria – check the precise details with your chosen lender – a remortgage to release equity deal involves taking out a new mortgage that pays off your existing loan and while also allowing you to borrow additional funds.
What is home equity?
Home equity, also known as mortgage equity, is simply the amount of your house that you own.
Any capital that you still owe as part of the mortgage isn’t included in this figure.
Home equity increases as your pay off your mortgage (more than the interest) and when the value of the property goes up.
How easy is it to remortgage and release equity?
It’s straightforward to remortgage and release equity from your home with the right guidance.
You can either remain with your existing lender by agreeing a product transfer, or switch to a new lender.
Sticking with your current lender will often make the process of remortgaging and releasing equity that bit quicker and easier, but with the right support, changing to a deal with new lender really needn’t be difficult either.
How much equity can I release by remortgaging?
When it comes to releasing equity from your home, it’s important to bear in mind that you’re borrowing money based on the property’s value.
Most mortgage lenders will have a maximum loan to value (LTV) that they’re willing to lend.
While that figure can vary, lenders tend to offer between 20% and 60% of your home’s value for this type of deal.
Factors such as a lender’s borrowing criteria, your age, and the value of your property, will be taken into account.
For a more accurate idea of how much equity you could release by remortgaging, we recommend talking to one of our experienced mortgage advisors.
Why not contact us today to find out more about how we can help?
How does remortgaging to release equity work?
There are a few ways that homeowners tend to release equity from their property when remortgaging, including:
Standard remortgage and equity release
With a standard remortgage and equity release, your monthly mortgage repayments will increase as you’re borrowing more money. Typically, the higher your LTV, the higher your interest rate will be.
It’s therefore crucial that you don’t borrow more equity than you need if you want to keep your monthly mortgage repayments as manageable as possible.
Lifetime mortgage
A lifetime mortgage, on the other hand, won’t increase your monthly mortgage repayments as this type of equity release loan is only repaid when the borrower dies (or enters long-term care).
While the homeowner retains ownership of the property, the interest on a lifetime mortgage will increase due to compound interest, leading to larger debt.
Home reversion plan
This type of equity release involves selling part or all of your home to a home reversion provider in exchange for either a lump sum of cash, regular income, or a combination of the two.
Essentially, this means you retain the right to live in the property until you move into long-term care or pass away, at which time the property will be sold and the proceeds divided accordingly.
How does this arrangement impact your mortgage repayments? It could reduce them, or eliminate them entirely, but this typically comes at the cost of reduced ownership and potential future equity loss.
Remortgage with UKMC today
Interested in obtaining a release equity mortgage?
Whether you’re considering whether to make sought-after home improvements, or want to book that trip of a lifetime, understanding how remortgage and equity release works can help you get the most out of your home.
Fortunately, our trusted remortgage advisors have years of invaluable experience assisting homeowners to switch to new and cost-effective remortgage to release equity deals.
