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UK Mortgages & Loans -> Equity Release

Remortgaging for equity release can be a very good alternative to taking out a personal loan, as it will typically allow you to borrow a larger sum of money, and is often given at a lower rate of interest than a regular loan.

With the continuing increases in property prices, the equity people have in their homes has increased significantly over the past few years, this means that homeowners typically have a large amount of money tied up in their home, an equity release remortgage allows them to get access to that money, to use for whatever purpose they wish.

The process of a remortgage is a fairly simple one, in essence the homeowner takes out a mortgage with another lender, that is sufficient to repay their existing mortgage, they then pay off this new mortgage over time. In the case of equity release, the new mortgage is simply for a larger amount than the outstanding mortgage, the surplus amount is paid to the borrower, hence ‘releasing’ some of the equity in their home for them to use.

The amount that can be made available to the borrower in this manner will depend a lot on the equity held in the property, this is basically the value of the property, minus the amount of the outstanding mortgage. Some equity release mortgages will allow the borrower to free up all of the equity, resulting in a 100% mortgage, however most will set a limit of 80-90% loan to value.

When taking this route to get access to money, it may also be possible to actually reduce the cost of the mortgage, especially if you have had your current mortgage in place for a number of years. Interest rates change over time, and they may well be significantly lower now than when you arranged your mortgage, if so then remortgaging could see you take advantage of a lower interest rate.

Shopping around is important, as there are a wide range of equity release mortgages available, and the rates charged can vary significantly between them. Also, try to find one that covers any legal fees and which pays any early repayment charges that may arise from repaying your existing mortgage, this alone could save you hundreds of pounds.

Equity release remortgaging is a good way for homeowners to get access to money, and is especially useful when the amount required is larger than a personal loan could provide. Using the capital in the house allows for large borrowing limits, and because the capital is used as security, the amount of interest charged is often very low compared to unsecured loans, and even normal secured ones.

We recommend these mortgage brokers who will search the whole UK mortgage marketplace to get you a great deal.