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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.
How to work out your home’s equity
It’s 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.
How to access some of this equity
You have a few options to access some of the funds locked in the value of your home:
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You could also make sure you're getting all the benefits you're entitled to. Our advisers can help you check what you're entitled to and tell you how releasing equity could affect any means-tested benefits you may already receive. Alternatively, you could ask a loved one for financial help or use any savings you may have.
There are two types of equity release:
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Home reversion: where you sell all or part of your home to a reversion company for less than market value in exchange for a cash lump sum, with no interest to pay on the money released, and no monthly payments to make. When the plan comes to an end, the home reversion provider takes its percentage share of the sale proceeds. You need to be 65 or over to qualify.
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Lifetime mortgage: which is a loan secured against your home and lets you access some of the tax-free funds tied in the value of your home while still retaining full ownership. You need to be 55 or over to qualify.
The equity can be released in various ways – either as a lump sum or in smaller payments after an initial lump sum, known as a drawdown lifetime mortgage.
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After any existing mortgage has been settled, the tax-free money released is then yours to spend in a variety of ways
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You retain full ownership of your property - you’ll be able to enjoy the funds you’ve released and your home, without the stress of moving
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A lifetime mortgage to release equity usually doesn’t involve monthly payments
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It's usually repaid after your property is sold when your plan ends - typically when you or the last remaining applicant either passes away or enters long-term care
Equity release benefits
Your specialist equity release adviser will explain:
Potential drawbacks
Your equity release adviser will also outline the following important things to think about:
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Equity release isn’t for everyone, so consider all your options and seek advice before going ahead to make sure equity release is right for you.
Remortgaging, is taking out a new mortgage deal with a different lender to replace an existing mortgage, the terms of which may be different to your existing mortgage. It's also slightly different to taking out a new mortgage when you buy a property.
Homeowners who have an existing mortgage against their property could have the option to remortgage their existing residential mortgage to receive an additional lump sum, which includes retirement mortgages.
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You could be eligible to remortgage your existing residential mortgage to take out equity on your home, as long as you meet the affordability and lending criteria
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If you’re still paying off your mortgage and your initial fixed term is coming to an end, it’s potentially an option to remortgage your existing residential mortgage - to secure a better rate
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If you do have equity in your home, this is when you could look at releasing some of it
Remortgaging to release equity
Remortgaging to release equity is a decision which must be thought about carefully. If you’re exploring the option of remortgaging your existing residential mortgage to release equity, here are a few things you’ll need to look at to work out whether it’s an affordable choice for you:
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If you decide to go ahead, your monthly repayments will likely increase to cover the bigger loan amount, and extending your mortgage's term means it will take you longer to pay it off.
If you’re considering remortgaging to release equity, speak to the expert team here at Key. We’ll talk you through the options available and see whether this is the one for you.
Benefits of remortgaging vs equity release
Potential drawbacks of remortgaging vs equity release
These methods of accessing funds from your home are not the same and there are key differences between equity release and remortgaging. The main factor is that remortgaging is available to homeowners of any age, whereas equity release is only for those aged between 55 and 95.
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.
Stay where you love
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.
Retain ownership
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.
Access the value locked in your property
Your “value”, which is commonly known as equity, is essentially tied up in the bricks and mortar of your property. If you’d like to access it, you’ll need to look into remortgaging or releasing equity.
There are many reasons why people choose to release equity or remortgage. Here are some of the most common uses:
Look at our customer stories to find out what others have used their equity release funds for.
Back to "What's in this guide?"
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As everyone has different needs, it's important you understand your options when considering remortgaging vs equity release. Key can help you find the right product to suit your needs - arrange a callback today and one of our experts will happily help you get started.
Remortgaging vs equity release at a glance
| Remortgaging | Equity release | |
| Monthly payments | Mandatory | Optional |
| Options to access funds | Lump sum only | Lump sum or Drawdown |
| Eligibility | Credit checks, age & affordability | Applicant age/value of home |
| Loan secured against home | Yes | Yes |
| Fees | £899 | £899 |
* Payable on completion
We're regulated experts
Key is regulated and a proud member of the Equity Release Council
Trusted award-winners
We've won 80+ awards and 17,000+ excellent Trustpilot reviews, making us the UK's most trusted equity-release specialist
Customer stories
ⓘ Did you know...
Over the years, our customers have benefitted from expert advice, experience and professionalism from Key. We've been rated 'Excellent' on Trustpilot and you can check out the great things our customers have to say.
With some products such as our lifetime mortgages, you’re unable to take one out without taking advice first.
Our friendly and experienced team are available to answer any questions you may have and will help you choose the perfect option. Contact us today or call 0808 252 9170. Alternatively, get started online today with our quick and easy-to-use calculators to see how much you could release.
Things to consider
Equity release - lifetime mortgages
- All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
- You should always think carefully before securing a loan against your home to repay existing debt
- The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
- £899 advice fee only payable on completion
- A mortgage is a loan secured against your home
- Your home may be repossessed if you do not keep up repayments
- You should always think carefully before securing a loan against your home
- £899 advice fee only payable on completion
RIOs and later life mortgages
Read our equity release articles
Equity release isn't something you should rush into. Read our RetireWise articles to learn more about how it works and whether it's right for you.
Page last updated: Friday 18 August 2023