What does releasing equity through remortgaging mean?
Equity is the difference between your property’s current market value and the amount you still owe on your mortgage. Releasing equity means borrowing more against your property so you can access some of that value as cash.
Equity is the difference between your property’s current market value and the amount you still owe on your mortgage. When you remortgage to release equity, you take out a larger mortgage than your current balance, and the difference is paid to you as a lump sum.
How equity works — an example
In this example, you have £120,000 of equity. Most lenders will let you borrow up to 80–85% of the property’s value in total, meaning you could potentially release up to £60,000–£75,000 while keeping a reasonable LTV.
How much equity can you release?
The amount you can release depends on three things: your property’s value, your outstanding mortgage balance, and how much the new lender is willing to lend based on your income and affordability.
Most lenders cap borrowing at 75–90% of the property’s value (loan-to-value or LTV). The higher the LTV, the higher the interest rate — so releasing equity typically costs more than a like-for-like remortgage.
Your income and outgoings also play a role. Even if you have plenty of equity, the lender will only let you borrow what you can comfortably afford to repay.
Quick equity release calculation
Take your property value, multiply by the maximum LTV you’d be comfortable with (e.g. 80%), then subtract your outstanding mortgage balance. The result is roughly how much equity you could release. For a precise figure, speak to a broker.
What can you use released equity for?
Lenders don’t usually restrict how you spend released equity, but they may ask about the purpose during your application. Here are the most common reasons people release equity.
Home improvements
- Extensions, loft conversions, or new kitchens
- Can increase your property’s value
- Often the most cost-effective way to fund large renovations
Helping family
- Gift a deposit to help children buy their first home
- Support family members through financial difficulties
- Lender may ask for a gifted deposit letter if it’s for a relative’s purchase
Debt consolidation
- Pay off credit cards, loans, or car finance
- Replace multiple high-interest debts with one lower payment
- Warning: total cost may be higher over the full mortgage term
Property investment
- Use equity as a deposit for a buy-to-let purchase
- Diversify your assets into the property market
- Lenders will assess affordability on both mortgages
What are the risks of releasing equity?
Releasing equity isn’t free money — you’re borrowing more against your home, which means higher monthly payments and more interest over the life of the mortgage.
Benefits vs risks
| Benefits | Risks |
|---|---|
| Access large sums at mortgage rates (lower than personal loans) | Higher monthly payments on the larger mortgage |
| No need to sell your home | More total interest paid over the mortgage term |
| Flexible — use the funds for almost any purpose | Less equity buffer if property values fall |
| Can add value if spent on home improvements | Your home is at risk if you can’t keep up repayments |
Think carefully about debt consolidation
While rolling debts into your mortgage lowers your monthly outgoings, you could end up paying significantly more in total interest because the debt is spread over 20–30 years instead of a few. Make sure you understand the long-term cost.
What alternatives are there to releasing equity?
Depending on what you need the money for, there may be cheaper or lower-risk alternatives worth considering.
Further advance from your current lender
- Borrow extra on top of your existing mortgage without switching lender
- May be cheaper than a full remortgage if the rate is competitive
- Less paperwork — usually no solicitor or valuation needed
Secured loan (second charge mortgage)
- A separate loan secured against your property
- Keeps your existing mortgage deal intact — no ERCs
- Higher interest rate than a first-charge mortgage but useful if your current deal has a good rate
Personal loan
- Unsecured — your home is not at risk
- Better for smaller amounts (£1,000–£25,000)
- Fixed repayment term, usually 1–7 years
Government grants or schemes
- Some home improvement works may qualify for grants or reduced-rate financing
- Energy efficiency improvements may be supported by government schemes
- Check local authority grants for specific renovation types
How to remortgage to release equity
The process is similar to a standard remortgage, with a few extra considerations around how much you want to release and why.
- 01
Work out how much equity you have
Get an idea of your property’s current value (online tools or a local estate agent can help) and check your outstanding mortgage balance. The difference is your equity.
- 02
Decide how much you want to release
Think about what you need the funds for and how much extra you can afford in monthly payments. Remember, the more you borrow, the higher your LTV and potentially your rate.
- 03
Speak to a broker
A broker will compare deals across the market, factor in fees and ERCs, and tell you exactly how much you can release at what cost. They’ll also check whether a further advance or secured loan might be a better option.
- 04
Apply for the new mortgage
Provide proof of income, bank statements, and details of the purpose of the additional funds. The lender will value the property and run affordability checks.
- 05
Completion and funds released
Once approved, the new lender pays off your existing mortgage and the additional amount is transferred to you. The whole process typically takes 4–8 weeks.
Get expert advice on releasing equity
At Clearview Mortgage Solutions, we help homeowners across the UK release equity for a wide range of purposes. We’ll explain exactly how much you could access, what it would cost in monthly payments, and whether equity release might be a better fit for your situation.
Read the full remortgage guide for a deeper walk-through, or contact us for a free, no-obligation equity release review. We’ll give you clear numbers, honest advice, and access to 90+ UK lenders.
We released £45,000 to build an extension that added real value to our home. Our broker found a rate that barely changed our monthly payments.
At Clearview Mortgage Solutions, we help homeowners across the UK release equity for a wide range of purposes. We’ll explain exactly how much you could access, what it would cost in monthly payments, and whether equity release might be a better fit for your situation.
Read the full remortgage guide for a deeper walk-through, or contact us for a free, no-obligation equity release review.