Is it better to remortgage or release equity?
 

Is It Better To Remortgage Or Release Equity | March 2024

This is a question faced by many homeowners in the UK. Both choices have advantages and drawbacks, which ultimately boil down to what is best for your unique situation.

This article will explore a number of reasons why you might choose to remortgage or to release equity.

Topics that you will find covered on this page

Why would you consider remortgaging or equity release?

There are numerous reasons why you might want to consider remortgaging to release equity or taking out an equity release plan. Maybe you would like to access some additional money to fund home improvements or consolidate other debt obligations. 

Perhaps you’re planning a special getaway or purchasing a new automobile – either way, you will need a way to access your home’s equity and remortgaging and releasing equity are two good methods.

Remortgaging is generally considered to be a great way of releasing equity while saving money on your monthly repayments, as you may be able to get a better deal than your current mortgage. It can also provide you with some extra cash that you can use for other purposes.

If you are aged 55 or over and interested in releasing equity, an equity release loan may be an alternative to selling your property and moving. This might provide you with a lump sum of money or a recurring income stream to complement your pension.

What is equity?

Equity refers to the portion of your property that you own outright.

Your equity is based on the market value of your property and how much you still owe on your mortgage – if you’ve paid off more of your mortgage, you will own more equity!

To work out how much equity you have, simply subtract the amount of your mortgage from the market value of your home.

So, if your home is worth £200,000 and you have a mortgage left of £150,000, your equity would be £50,000.

In general, the more equity you own, the better the position you will be in because the amount of money you owe on your mortgage relative to the value of your home will be lower.

Remortgaging to release equity from your home

If you are trying to release some equity from your home, remortgaging is one option to consider.

This involves taking out a new mortgage or home loan secured against your property and using the extra cash to pay off your existing mortgage.

Speak To An Equity Release Advisor Or Use the Equity Release Calculator Below To Estimate How Much You Can Borrow

The UK Care Guide works in partnership with Boon Brokers, one of the UKs leading equity release specialists.

You can contact them on 0333 567 1607 , or use the equity release calculator to estimate how much you can borrow.

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Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements.

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All equity release and mortgage advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757. 

If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation.  By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.  

The fee we receive is used to help keep this site operational and to produce new content.  

Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

remortgage and equity release

How does remortgaging work?

When you remortgage, you are removing an existing mortgage and taking out a new one on the home that is equivalent to it. This can be achieved through your current lender or with a new mortgage broker or lender. The new mortgage will generally have a higher amount and higher interest rates than your previous one.

You can use your new mortgage to raise cash to pay off all or part of your existing mortgage. This is known as ‘repaying your mortgage in full’. Alternatively, you can just make smaller monthly repayments as normal.

If you opt to remortgage with a new lender, you’ll follow the same procedure as when you originally took out your mortgage. This includes having your property assessed and demonstrating that you can make the payments.

You should also compare the different mortgage deals on the market to make sure you’re getting the best deal possible.

What are the benefits of remortgaging?

There are a number of different benefits to remortgaging, including:

  • You could save money on your monthly repayments – depending on your monthly outgoings and current loan to value.
  • You could release equity from your home
  • You could use the extra cash for home improvements or other purposes

What are the risks of remortgaging?

However, there are also some risks of which you need to be aware, including:

  • Your home could be repossessed if you can’t keep up with the repayments
  • You could end up being required to pay more interest overall if you extend the term of your outstanding mortgage
  • You may have to pay early repayment charges if you’re still tied into your current mortgage deal
  • The value of your home could fall, leaving you with negative equity
  • You might have to pay an exit fee – depending on the terms of your mortgage

Can you remortgage in later life?

Remortgaging is available to individuals of all ages, not just young homebuyers. If you’re approaching retirement or have already done so, you may still remortgage.

In fact, there are now various mortgage alternatives specifically designed to be accessible to individuals in later life.

For example, some lenders offer ‘lifetime mortgages’. Lifetime mortgages tend to allow you to borrow money against the value of your property while still owning it. You do not have to make any monthly repayments to mortgage lenders, as the outstanding loan and interest are repaid when your property is sold after your death.

Best Equity Release Interest Rates as of 24 February 2024

The table below shows you some of the best equity release rates, as of 24 February 2024, for lifetime mortgages from some of the leading equity release providers in the UK. 

Provider NameProduct NameInterest RateType of productOffers
Standard LifeHorizon 200 Drawdown5.26%FixedFree Valuation
Standard LifeHorizon 200 Drawdown Fee Free5.31%FixedFree Valuation
No application fee
More2LifeCapital Choice Ultra Lite Drawdown 15.46%FixedFree Valuation
No application fee
LV=Drawdown Lifestyle DD15.58%FixedFree Valuation
No application fee
Scottish WidowsFR15.60%FixedCashback
Free Valuation
No application fee
Standard LifeHorizon 280 Drawdown5.60%FixedFree Valuation
Legal & GeneralInterest Roll-Up 15.61%FixedFree Valuation
Legal & GeneralOptional Payment 15.61%FixedFree Valuation
LV=Drawdown Lifestyle DD25.63%FixedFree Valuation
No application fee
Legal & GeneralInterest Roll-Up 1 (no fee)5.65%FixedFree Valuation
No application fee

The equity release rates have been sourced by UK Care Guide from the Equity Release Supermarket website. These rates may have changed since this table was created and should be taken as indicative only. There may be other providers not listed on this table that could offer better deals.  In addition, the providers and products noted may not be right for your particular circumstances.  Therefore, they should only be taken as a guide, and we cannot guarantee their current accuracy. Please also note that we do not provide advice on or endorse any particular product listed here. The rate you are offered will depend on your individual circumstances and subject to lender approval. Therefore, we strongly recommend that you speak to an equity release adviser, who will be able to provide you with information on the latest rates that apply to you.

Speak To An Equity Release Specialist Today

Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements and see what deals are available to you.

equity release remortgage

How long will it take to release equity through remortgaging?

The process of remortgaging can take several weeks.

First, you’ll need to compare mortgage deals and find one that’s right for you. Then you’ll need to have your property valued and fill out a mortgage application form.

Your loan application will be submitted for review once it has been accepted. The paperwork will be sent to you to sign after your application has been approved. After you’ve returned the signed documents, the mortgage will be completed.

The whole process can take several weeks, so it’s important to factor this in if you’re looking to release equity quickly.

Can I still move house if I remortgage?

If you’re thinking of moving house in the near future, you may be wondering if you can still remortgage. The answer is yes; you can – although there are a few things to bear in mind.

First of all, you’ll need to make sure that your new mortgage deal allows you to move house. Some deals have restrictions in place, so it’s important to check before you apply.

In addition, if you’ve undertaken a mortgage agreement to remortgage your property, there may be an early repayment charge. If you’re considering remortgaging and then selling your home shortly after, keep this in mind.

Finally, it’s worth noting that the process of remortgaging can take several weeks, so you’ll need to factor this into your plans.

Using equity release to access value from your home

If you’re a homeowner, you may be able to access the equity – or cash – that’s tied up in your property. This is known as ‘equity release’.

How does equity release work?

There are two main types of equity release products:

  • Lifetime mortgage: With a lifetime mortgage, you borrow money against the value of your property. Under a lifetime mortgage, you still own your property outright. The loan and interest are repaid when your property is sold after your death.
  • Home reversion: With home reversion, you sell all or part of your property to a provider in return for an initial release of a lump sum or regular monthly payments.

What are the advantages of equity release?

There are a number of benefits to equity release plans, including:

  • You can release cash that’s currently tied up in your property, usually as a tax-free lump sum – you can find out how much cash you might be able to release using an equity release calculator
  • You will not have to commit to making any monthly repayments, as the loan is repaid when your property is sold after your death
  • You can remain in your property for as long as you like
equity release or remortgage

What are the disadvantages of equity release?

Before you decide to take out an equity release plan, it’s important to be aware of the potential disadvantages, including:

  • Your home could be repossessed if you can’t keep up with the repayments on your equity release loan
  • You could end up paying more interest overall if you extend the term of your existing residential mortgage – interest rates could also change
  • The value of your property could fall, leaving you with less equity to pass on to your heirs
  • You may not be able to move house if you have a lifetime mortgage

Could equity release work for you?

Equity release could be right for you if you’re a homeowner over the age of 55 and looking to you’re happy for equity release as one lump sum and are happy to stay in your property for the rest of your life. It can be a good option to avoid having to make monthly repayments, as the loan is only repaid at the point that your property is sold after your death.

If you decide to take out equity release, make sure to consult an equity release adviser or financial adviser and engage a provider who is regulated by the equity release council to ensure you are provided with a ‘no negative equity’ guarantee. You can check their status on the Financial Services Register or with the Financial Conduct Authority.

Are there other options?

While remortgaging and equity release are both good options, there are other ways to access the cash tied up in your home if you don’t want to remortgage to release equity or are looking for more money than an equity release remortgage could provide.

Selling your property

One option is to sell your property and downsize to a smaller and cheaper property. This might free up some cash that you can use for other purposes, such as paying short-term debts while keeping you on the property ladder. This may or may not be a good option depending on your property wealth and current house prices.

Taking out a personal loan

Another potential option you have is to take out a personal loan or a money transfer credit card. This could be a good idea if you need a lump sum of cash for a specific purpose. 

Making extra mortgage repayments

You might make overpayments on your outstanding mortgage if you have some spare cash. This will help you to save money on interest (depending on the interest rate) and might help you pay off your loan faster.

So, is it better to release equity or remortgage?

There’s no easy answer to the question of whether it is better to take out equity release or remortgage. It depends entirely on your individual circumstances and what you want to achieve.

If you’re looking for a way to access the cash that’s tied up in your property, remortgaging and equity release can both be good options. However, it’s vital that you carefully consider the pros and cons of each option before making a decision and seek advice before borrowing money – especially if you have a large amount of outstanding secured debt.

It might also be worth taking financial advice on the best way forward for your personal circumstances and financial situation.

use the equity release calculator to see how much money you could release from your property. Takes less than 60 seconds!

remortgage to release equity

Financial Promotions Sign-off

Where applicable, the adverts for Boon Brokers on this page have been signed off as a Financial Promotion by Boon Brokers Limited, to ensure that they are in compliance with Section 21 of FSMA. Boon Brokers Limited is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.

The Age Partnership equity release calculator has been approved and provided by Age Partnership. Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432.

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Frequently Asked Questions (FAQ)

What is equity?

Equity refers to the portion of your property that you own outright.

Your equity is based on the market value of your property and how much you still owe on your mortgage – if you’ve paid off more of your mortgage, you will own more equity!

How does remortgaging work?

When you remortgage, you are removing an existing mortgage and taking out a new one on the home that is equivalent to it. This can be achieved through your current lender or with a new mortgage broker or lender. The new mortgage will generally have a higher amount and higher interest rates than your previous one.

Can you remortgage in later life?

Remortgaging is available to individuals of all ages, not just young homebuyers. If you’re approaching retirement or have already done so, you may still remortgage.

So, is it better to release equity or remortgage?

There’s no easy answer to the question of whether it is better to take out equity release or remortgage. It depends entirely on your individual circumstances and what you want to achieve.

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If you take out a product from Boon Brokers, we will receive a fee for introducing you to them.

Unlike most equity release advisors, Boon Brokers do not charge any fees! Have a free consultation to see how they can help.

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Use the equity release calculator and see how much money you could receive.

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All equity release advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757. 

 

If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation.  By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.  

The fee we receive is used to help keep this site operational and to produce new content.  

 

Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

Get FEE-FREE Equity Release Advice