Can I release equity from my house?

21st January 2023 posted in Buyers

Releasing equity is a way to access some of the value that you’ve built up in your home. It’s a good way to make money from your property to pay for things like home improvements or a wedding, but there are some important factors to consider first.

Read our guide below to learn more about how to release equity from your property.

What is equity release?

Equity release is a way to access the money you have tied up in your home. Equity is the money that you own that’s currently invested in your home, and equity release gives you access to this money. Equity is the difference between your property value and the amount you have left on your mortgage.

For example, if your house is worth £300,000 and the amount of mortgage you owe is £150,000, you have £150,000 of equity in your home.

Releasing equity gives you a sum of cash to do whatever you want with, but bear in mind that you’ll owe more on your mortgage and your monthly mortgage payments are likely to go up.

In order to qualify for equity release you’ll have to meet certain requirements, and these will be decided by your lender.

How to release equity from your property


Many people remortgage when they come to the end of their mortgage deal. This is because it’s a good way to access better deals, and the value of the property may well have increased giving a lower loan to value ratio (LTV).

For example, if your £300,000 house is now worth £350,000, you could get a new deal with lower monthly repayments, or you could release some or all of this extra £50,000 and keep your payments roughly the same (if you can get a similar deal).

Lenders will look at your finances and other factors (including your credit score) before making you a remortgage offer. You can use an online mortgage calculator to figure out how much you might be able to borrow and therefore how much you could release from your home.

Lifetime mortgages

Another option for people who are over 55 years old, is to take out a lifetime mortgage. This is generally only available to people who own their home outright and whose home is worth more than £70,000. The rules are different between lenders, but it’s a way to enjoy some of the money you’ve made owning your property without selling your home and downsizing. You can take out one lump sum, or set up releases of several smaller amounts. However, bear in mind that interest can build up on lifetime mortgages very quickly.

Home reversion

Home reversion is when you sell some or all of your home to a home reversion provider and you get paid a lump sum or several smaller sums of money. It’s generally only available to older people, aged over 60 or 65 years. You continue to live in the home until you go into care or you die, but you must maintain the property well and insure it. If you only sell part of your property, you can ring-fence an amount of your property’s value to pass on as inheritance and this amount won’t fluctuate, even if your property’s value does.

Should I release equity from my house?

Releasing equity from your home gives you access to your money for any number of reasons. You might want to renovate your home, help with a family member’s education or start a business. However, it’s important to consider the long term impact of releasing equity and what this will mean for you. It’s essentially another way to borrow money, and this will put you into further debt.

Whether equity release is right for you depends on your age, income, savings, how much you want to release and what your future plans are. A relatively quick and easy cash injection is very tempting, but there’s a lot you should consider before going ahead with it.

If you’re not sure whether equity release is a good idea, then it’s worth getting some professional financial advice from a qualified expert who’ll help you to consider all your options.

Considerations before releasing equity

· If you remortgage, you’ll pay back more money

In the long term, you’ll end up paying back more money overall, and there’ll be interest to pay on your higher mortgage amount. Your monthly mortgage payments may increase and you’re likely to take longer to clear your mortgage completely.

· High interest on lifetime mortgages

Lifetime mortgages don’t have to be repaid until you die or move into long term care, but the amount of interest you’ll pay on this type of mortgage is higher than on a general mortgage.

· Less inheritance for family or friends

By taking equity out of your property, there’ll be less inheritance to pass on. If you get a lifetime mortgage to release equity, the interest can build up very quickly so there’ll be a lot more to pay back when the mortgage is resolved.

· Home reversion won’t give you market value

Home reversion plans don’t give you the true market value of your property. Whilst you can stay living in your home potentially rent free, you’ll always get less than you would by selling your property on the open market.

· Check your mortgage terms

If you’re remortgaging to release equity, you may have to make an early repayment charge on your current mortgage so it’s worth checking with your lender before putting anything into action. Additionally, you may have to pay an exit fee, which is a different cost to an early repayment charge.

· Could you downsize?

You could sell your home and buy a less expensive home to free up a sum of money. Downsizing is a good way to release funds without taking on another mortgage, but there are other costs to consider, such as conveyancing fees.

· How much do you need?

It could be worth looking at what savings you have or any credit you could get in the form of a personal loan or credit card. This all depends on the amount of money you want or need, and how much you can afford to pay back at a time.

· What if house prices fall?

Consider what would happen if house prices go down. Is there a risk that you’d end up in negative equity? This would mean that you’d owe more than your property’s worth, making it very difficult to remortgage or to sell your home.

· Long-term care

If you use up a lot of your equity now, you’ll have less to fall back on in your later years. If you need long term care there may be high costs for this.

If you’re thinking about how to release equity from your property, the best place to start is to find out how much your home’s worth in today’s market. Get in touch with us now to book in your free property valuation appointment – we look forward to hearing from you.