Remortgaging is a suitable strategy for many homeowners looking to ensure they have the best deal and are paying an affordable rate each month. It never hurts to check your current mortgage to determine if you can arrange a better deal.
However, homeowners don’t just remortgage to lower their monthly payments or to find a way to pay their mortgage off earlier. By releasing equity through a remortgage you can generate funds that help you improve your home, help loved ones, pay off debt or any other act that costs money and which you wish to make.
What is equity?
Equity states how much of a property you own outright. If you purchase your home with a 10% deposit, at that time, you own 10% equity in the property. Over time, as you pay off more of the mortgage, the amount of equity you own in a property increases.
Also, if your property increases in value, the percentage and amount of equity you own will increase.
Is Equity Release the same as a Remortgage?
Equity Release generally refers to accessing equity that you have in your property and you repay this at a later date, usually when the homeowner passes away. Alternatively you could choose to remortgage to release some of the cash tied up in their home. This means arranging a new mortgage deal that is larger than your existing mortgage and you pay off this debt by making monthly payments over the term of the mortgage.
Should I remortgage to release equity?
By remortgaging and releasing equity, you have more money to spend in the present day. This act allows you to access some of the value of your home now, but not all of it.
Raising money through a Remortgage is a smart move for many homeowners, as it can be more affordable than arranging a personal loan or placing the expenditure on a credit card.
Make sure any additional borrowing against your home is affordable in the short and long term because if you are unable to keep up the repayments you may lose your home.
Alternatives of remortgaging to access equity
Further Advance – This is an additional loan provided by your existing mortgage lender which is secured against the property.
Secured Loan – This is a separate loan, also known as a 2nd mortgage, where the borrowing is also ‘secured’ against your property. These are typically provided by specialist lenders.
You could choose to sell your home and downsize, but of course, you would then be looking for a new place to live.
How to explore your mortgage options with The Money Hub
Call The Moneyhub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Remortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.