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Can I release equity from my house?

Yes, you can release equity from your home and there are many reasons for wanting or even needing to. Such reasons include:

  1. Raising equity for home improvements
  2. To pay off loans and debts
  3. You’re coming close to your retirement

How to release equity from house

If you have an income it is very likely that you will be able to consider releasing 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 are considering releasing equity. In this guide, we will set out several reasons you may want to release 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 release equity for home improvements?

The number reason people release equity is for home improvements. This can be done as a further advance or when remortgaging.

The most cost-effective way and time to do this is when you remortgage. The main reason is that when you remortgage there will be no early repayment charge from your current lender on your outstanding mortgage. You will also have no additional upfront costs and fees from a new lender for the equity release. – Contact us about remortgaging to release equity.

Another benefit of raising money when remortgaging for home improvements is you will be able to have one fixed interest rate with one tie-in date rather than two! You should also aim to get a lower interest rate to save money.

Most banks and building societies will let you release equity for home improvements as more than often the money you raise will add the equivalent value of your home and often more!

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

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Can I free equity for debt consolidation?

Mortgage lenders will consider raising equity or money to repay a credit card and personal loan. 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.

Each bank and building society uses 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 how much they are willing to lend. The lender will make it a condition when you release equity that you repay the credit card or personal loan on completion.

Before you carry out any debt consolidation you need to get sound financial advice from a mortgage broker. 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 residential y mortgages up to a maximum of 80% loan to value (LTV).

Can I free equity to buy a second home?

A lender will consider that you release part of your 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 so will depend on how much equity you have in your current home so get good advice from a mortgage broker to advise and guide you.

Related reading:

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

Most 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 home you do not own and secondly, you will no longer need to pay rent saving you money.

The shared ownership company will need to get an updated value of the house and give you an update on the outstanding loan.

Speak to a broker who will soon be able to check you will have no early repayment charges on your existing mortgage then calculate whether you have some options and can buy a further share or even see if you could own 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. Mortgage providers are happy to lend you extra money on this basis as long as the monthly repayments are affordable. Speak to a mortgage consultant who will have access to the lender’s mortgage affordability calculators to see if this is possible.

Can I release equity in retirement?

Remortgaging to release equity for retirement is possible. If you have retirement income 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 monthly repayments could be high.

You may have heard of equity release plans and lifetime mortgages or a home reversion plan which is slightly different – Equity release plans or lifetime mortgages are ways of getting equity using your home. This can be a tax-free lump sum or a monthly income.

This equity release loan is used against the market value of your home but the “catch” is that the provider must be repaid the money you borrowed plus you pay interest at a later stage, usually when the homeowner dies.

We would advise you to think very carefully before you take an equity release plan. 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.

Remortgaging to release equity from a buy to let?

It is usually possible to remortgage to release equity from your buy-to-let investment property. Most lenders will need you to leave at least 25% equity in the house however it should be possible to release the excess equity subject to the lenders’ discretion.

Speak to a mortgage adviser who will help you calculate how much equity you will need to leave in your home. How much you will have on the residential mortgage and also how much equity you will be able to use towards buying an investment buy-to-let property. The adviser will also research the mortgage market to get you the lowest interest rates.

They will contact your tenant so the lenders’ valuation survey can be carried out to ascertain the value of your property and then see the application through to completion.

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Reasons mortgage lenders won’t let you release equity 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 from your house to start a business. However, there are a few lenders and a few businesses that will even be considered in the first place.

There are some other situations that could stop you from being able to release equity from your property.

  • Your loan-to-value is too high therefore you have low or negative equity
  • Your affordability is low

How do I work out my loan-to-value (LTV)?

The loan to value also known as LTV is calculated by dividing the amount of the 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 (LTV) is 75%.

What do you mean by affordability?

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

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 you do release equity from your home as part of your mortgage renewal the equity raised will be sent to you through bank transfer by your conveyancer.

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

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Frequently Asked Questions

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 broker before you get a mortgage application with a new lender underway.

Get a FREE Credit Report here.

Get advice from a 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 to get you the lowest monthly repayments and also be able to find the lenders that are offering the best incentives and savings. These incentives can be really financially helpful for example:

  • Free valuation surveys

  • Free legal fees

  • No arrangement fees

A broker will then submit your mortgage application for you and see it through to the 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.

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

Releasing equity with help from a mortgage broker

When it comes to remortgaging to release equity, using a mortgage broker’s services is highly recommended. They will not only be able to find you the best mortgage rate and deal, they will manage the whole remortgage process to save you time and money. You can even instruct a fee-free broker thus saving you even more money.

Lets see if you can release equity from your property

Introducing YesCanDo Money FREE Mortgage Advisers

YesCanDo Money is a family-run independent no-fee broker. Established over 30 years ago they have an amazing track record in helping people and adding value to achieve the best interest rate and deal.

With a team of 17 mortgage advisers, this means there is always someone on hand to help you and give sound financial advice. The team is located in Hampshire and covers the whole of the UK via phone, email, WhatsApp, and video calls.

Being whole of 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 lenders with over 14,000 different interest rates and mortgage deals to find you the very best mortgages.

Related reading:

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Steve Roberts
Steve Roberts

Stephen Roberts MAQ is the founder of YesCanDo Money, one of the UK'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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