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Remortgaging your existing residential mortgage vs equity release

Undecided between equity release or remortgaging your existing residential mortgage? Key could help you find the answer

If you’re looking to release some of the funds tied up in your home, you could look at remortgaging your property, or maybe even explore equity release.

Property wealth among those in or approaching retirement has never been higher. It's great news for homeowners looking for a financial boost later in life. But what if you want to stay in your own home and still reap the rewards of increasing house prices? 

Why not speak to our team to see whether equity release or remortgaging your existing residential mortgage could be the answer for you. Whichever route you look to take, there are a number of considerations to both. At Key, we want to make sure that each option is as transparent as possible, so here's a short guide to both to help you decide which suits your financial situation better. 

Why would you look at remortgaging or releasing equity?

If you own a property, it’s likely that your home is your biggest asset. There may come a time in your life where you’d like to access some of its value, without having to sell and move on. Our homes often mean much more to us than just being a place to live, and the thought of packing up and moving can often be a tough decision to make. 

Yes, you may have had to take out a mortgage to purchase your home, and although it’s a big commitment, it’s likely one that has grown in value over the years. You'll still own your home and what you own may also increase in value as well. 

Your “value”, which is commonly known as equity, is essentially tied up in the bricks and mortar of your property, so if you’d like to access it you’ll have to look into remortgaging or releasing equity in another way. Whether you’re planning a once-in-a-lifetime trip, want to pay for university fees or simply wish to have some money for you and your loved ones to enjoy, Key could help you.

How to work out your home’s equity

It’s pretty simple to work out your home’s equity.

The market value of your house – any outstanding secured debt = your equity

As an example, if your property is worth £400,000 and your mortgage is £100,000, you’ll have £300,000 of equity.

If you’re wanting to access some of this equity, then you can. A popular option is to downsize to a smaller, cheaper property – meaning you’ll pay off your mortgage and keep any amount left over once you’ve paid for the costs of selling and buying.

If you don’t want to move home, then you could look at equity release or remortgaging. Both are great options if you’re seeking to release funds. Maybe you’re thinking about how to release equity for an extension if you’d prefer to stay where you are, this would require permission from the lender. When releasing equity the good news is that you could use the funds in a variety of ways.

Page last updated: Tuesday 12 April 2022