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Can I release equity from my home?

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Can I release equity from my home
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There are many reasons for wanting or even needing to take equity from your home.

  1. You’re coming close to your retirement.
  2. You want to raise equity for home improvements.

How to release equity and cash from your home

If you have an income it is very likely that you will be able to release equity from your home. It will be age-dependent and also depend on how much income you have and how much you want to release.

The chances are that your home has increased in value since you bought it, Maybe you want to take advantage of this and release some equity. In this guide, we will set out several reasons you may want to free equity from your home. We will provide you with valuable information as well as tips and ideas on how this can be achieved.

Can I free equity for home improvements?

This is the most common reason that people realise equity from their property. This can be done as a further advance or on a remortgage. The most cost-effective way and time to do this is when you remortgage. The reason is that when you remortgage there will be no additional upfront cost for raising this extra money. Another benefit of raising money on a remortgage is you will be able to have the one fixed rate with one tie in date rather than two!

Most banks and building societies will be keen to let you raise equity for home improvements as more than often the lump sum you raise will add the equivalent value of your home.

Most high street lenders will allow you to increase your new mortgage to a Loan up to a maximum of 90% loan to value (LTV).

Can I free equity for debt consolidation?

Mortgage lenders will consider raising equity or money to repay credit cards and loans. They will look very closely to make you can afford the monthly payments and because you have debts they will want you to have a good credit score and not have any missed or late payments.

All mortgage lenders use an affordability mortgage calculator to decide how much you can borrow. They will use your income and outgoings including debts and will then make a decision based on these on how much they are willing to lend.

Before you carry out any debt consolidation you need to get sound financial advice from a financial adviser or consultant. The reason for this is although you are likely to reduce your monthly outgoings significantly, over the term it will cost you far more in interest.

Most high street lenders will allow you to increase your mortgage to a Loan up to a maximum of 85% loan to value (LTV).

Can I free equity to buy a second home?

A lender will consider you releasing equity to buy a second home or even to purchase an investment Buy To Let property. Remember that you will need a 25% deposit on a Buy To Let property and this is a significant amount to raise therefore get good advice from a mortgage advisor to advise and guide you.

Can I free equity for repayment of help to buy Equity loan?

This is definitely an area that lenders will be able to help you.

The Help to Buy: Equity Loan the Government lends you is interest-free for the first 5 years. However, most people will want to repay this before they start paying interest.

The maximum the government will have lent you was 20% to help you with the deposit. Speak to a mortgage broker who will work out if this is possible based on your income. The best time to look at this is when your remortgage is due for example at the end of your fixed-rate deal.

Can I free equity to buy more of my shared ownership property?

Mortgage lenders are always happy to help you buy either a further share or all of your shared ownership property. There are many benefits to owning the whole of your property. Firstly the price is not increasing to the part of the property you do not own and secondly, you will no longer need to pay rent. Speak to a mortgage adviser who will soon be able to calculate whether you can but a further share or even the whole of the property.

Helping children with a house purchase?

Yes, it is possible to release funds to help your children get on the property ladder. Lenders are happy to lend you extra money on this basis as long as it is affordable. Speak to a mortgage consultant who will have access to the lender’s mortgage affordability calculators to see if this is possible.

Paying too much for your mortgage?

Chances are you could save money with a better rate
Ever wondered how wonderful it would be to save money and reduce your monthly outgoings? We do everything for you whilst supporting you every step of the mortgage process.

Can I release equity in retirement?

Yes, this is possible. If you have income in retirement for example pension income and investment income it may be possible to raise money. You need to be aware that depending on your age the term may not be very long and therefore the mortgage repayments (monthly repayments) could be high.

You may have heard of equity release which is slightly different – Equity release is a way of still using your home or and getting a lump sum or a monthly income. This loan is used against the value of your property but the “catch” is that the provider must be repaid at a later stage, usually when the homeowner dies.

We would advise you to think very carefully before you take an equity release. Involve your family and also get sound financial advice from a SHIP credited company.

Safe Home Income Plans (SHIP) was launched in 1991 in direct response to the growing need for consumer protection and represented the majority of equity release providers of lifetime mortgages and home reversion plans.

How do I work out my loan to value?

An LTV Loan to value is calculated by dividing the amount of loan by the value of the property.

For example, if the value of your home is worth £200,000 and you have a mortgage of £150,000 then the loan to value is 75%.

What do you mean by affordability?

There can be many reasons what you may want to borrow against your property. The first consideration to make is the fact that this could be a long term commitment financially.

Reasons mortgage lenders won’t let you do an equity release on your home

There are 3 main situations where lenders do not like to let you raise a lump sum from your property. These are:

  1. Raising funds to pay tax
  2. Raising funds to pay off gambling debts.
  3. Lenders are also unsure about letting you raise equity to start a business. However there a few lenders and a few businesses that will even be considered in the first place.

How long does it take to remortgage?

The average remortgage takes 8 weeks if you are organised and have all the paperwork and information to hand that will be needed. If do equity release as part of your mortgage renewal the extra funds raised will be sent to you through bank transfer by your conveyancer.

Here we guide you through a break down of how long the remortgage process takes.

Do I need a good credit score to remortgage?

When you remortgage every mortgage lender will check your credit score before offering you a lifetime mortgage. Most lenders use Experian and or Equifax and you will need a reasonable score. If you are concerned about your credit score at all we would suggest you get a report from Experian and then show it to your mortgage broker before you get a mortgage application with a new lender underway.

Will I be turned down for a mortgage because of my overdraft?

These 3 things could stop you getting a mortgage…

Where can I get advice on releasing equity?

Get advice from a mortgage broker. Tell them what you are trying to achieve and they will then search the whole mortgage market to match up your requirements with a lender that can help you. They will also be able to find you the lowest interest rates and also be able to find the mortgage lenders that are offering the best incentives. These incentives can be really financially helpful for example:

  • Free valuation surveys
  • Free legal fees and
  • No arrangement fees

A mortgage broker will then submit your application for you and see it through to mortgage offer and then completion. If you are worried about how much this may cost and would like to know how you can get a broker that does not charge. Make sure you read the next section.

How do I find a fee-free mortgage broker?

Although a lot of mortgage brokers will charge you for their services anywhere between £500 and a £1,000 to arrange a mortgage there is such a thing as a no-fee mortgage broker.

Google Fee-Free mortgage broker near me and you will get a list of mortgage brokers that will be able to help. It’s worth taking a few minutes to take a look at their Google and Facebook reviews to make sure they have helped lots of people and those people think they are great. Communication is very important when arranging a mortgage so make sure this is reflected in the reviews.

Introducing YesCanDo Money

YesCanDo Money a family run independent no-fee mortgage broker. Established over 30 years ago they have an amazing track record in helping people achieve their best rate and deal. The team of 17 Mortgage advisers and mortgage consultants means there is always someone on hand to help you and give sound mortgage and financial advice. The team is located in Hampshire but cover the whole of the UK via the phone, email, WhatsApp and video calls.

Being whole of the market means they will be able to search the whole mortgage market to find you a lender that will able and willing to equity release. Also, they will have access to over a hundred mortgage providers with over 14,000 different rates and deals to find you the very best mortgage.

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Steve Roberts
Steve Roberts

Stephen Roberts MAQ is the founder of YesCanDo Money, Hampshire's largest no-fee mortgage brokers. With over 30 years of mortgage experience, he has advised and helped thousands of First-time buyers buy their first home and home movers buy their dream home. Speak to a mortgage expert today by completing our contact form:

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