You may be able to borrow more by replacing your existing mortgage with a larger ordinary residential mortgage. After the old mortgage and relevant costs are paid, the remaining funds can be used for a purpose accepted by the new lender.
This is sometimes described as remortgaging to release equity. It is additional borrowing secured against your home, not a withdrawal from a savings account. You will owe more, and having equity does not automatically mean you can afford or qualify for a larger mortgage.
My advice scope: I advise on standard residential mortgages. I do not advise on lifetime mortgages or home reversion plans. If you want to explore those specialist equity-release products, I can refer you, with your agreement, to a specialist equity-release broker.
What does remortgaging to release equity mean?
Equity is the difference between your property's value and the borrowing secured against it. With a £320,000 home and a £160,000 mortgage, you have £160,000 of equity, assuming there are no other secured loans.
That does not mean £160,000 is available to borrow. A lender assesses how large the new mortgage can be, including the amount needed to repay your existing loan. Borrowing extra reduces the equity you retain if the property value stays the same.
You may also hear this called a capital-raising remortgage. You remain in the same property, but the mortgage balance and potentially its rate, term and repayments change.
How much extra could you borrow?
Two separate limits matter: how much the lender will lend against your property, and how much it considers affordable from your income and commitments. Your borrowing purpose, credit history, age, proposed term and the property itself can also affect the decision.
Loan-to-value, or LTV, is the mortgage expressed as a percentage of the property value. A £208,000 mortgage on a £320,000 home has an LTV of 65%. Lenders set their own limits, which can vary depending on why you are borrowing more.
A worked example: equity, extra borrowing and cash available
Suppose a lender accepts a £320,000 valuation and approves a new mortgage of £208,000. The following illustration separates the mortgage balance from the money available to spend.
| Item | Amount |
|---|---|
| Property value accepted by the lender | £320,000 |
| Existing mortgage to repay | £160,000 |
| Equity before the remortgage | £160,000 |
| New mortgage, assuming approval | £208,000 |
| New loan-to-value ratio | 65% |
| Extra borrowing before costs | £48,000 |
| Illustrative total costs paid from that surplus | £2,000 |
| Cash remaining after those costs | £46,000 |
The extra borrowing is £48,000, but the cash left after the illustrative costs is £46,000. Your new mortgage debt is £208,000, and your remaining equity is £112,000, assuming the property value is unchanged.
These figures are examples, not a quotation or lending limit. The calculation assumes no other secured borrowing, no fees added on top of the £208,000 mortgage, and £2,000 covering all costs paid from the surplus. Actual fees, any early repayment charge and the amount needed to redeem your old mortgage may differ.
The lender's valuation may also differ from an estate agent's estimate. If it is lower, your LTV increases for the same loan amount, which could change the available deal or the amount you can raise. Read Do you need a valuation to remortgage?
What can you use the additional borrowing for?
Potential uses include home improvements, buying out a co-owner or putting money towards another property. Acceptance depends on the lender: a purpose allowed by one may be restricted by another, or have a different borrowing limit.
Explain all intended uses accurately before applying. The lender may request supporting evidence, such as a breakdown of planned works. Do not assume that future renovations will automatically increase the valuation used for your application.
If your goal is another property, read Can I remortgage to buy another property? for the additional funding and affordability considerations.
Paying off unsecured debts needs particular care. Moving credit-card or personal-loan debt into a mortgage secures it against your home and could increase the total interest paid over a longer term. If you are struggling with debts, seek free debt advice, for example from StepChange, before taking on more secured borrowing.
Should you remortgage or borrow from your current lender?
A larger remortgage is not the only way to raise funds. The comparison should include what happens to your existing mortgage, as well as the cost of the additional money.
| Option | How it works | What to compare |
|---|---|---|
| Remortgage to a new lender | Replace the existing mortgage with a larger one. The new mortgage repays the old loan and provides the agreed additional funds. | Check the rate and cost of the whole replacement mortgage, plus switching fees and any early repayment charge. |
| Further advance from your current lender | Keep the existing mortgage and apply to the same lender for extra borrowing, often on a separate rate or mortgage part. | Compare both parts together, including their repayments, terms, fees and the dates any fixed rates end. |
| Second-charge mortgage | Keep the first mortgage and take a separate loan secured against the same property, usually with another lender. | Obtain advice on suitability and compare the combined cost. The extra loan also puts your home at risk if payments are missed. |
For example, if your existing mortgage has a competitive fixed rate, replacing the entire balance could be expensive even if the rate on the new borrowing looks attractive. Equally, a further advance is not automatically the cheapest choice. Compare the combined payments, fees and balances over the same period, with the repayment terms clearly identified.
A straightforward product transfer changes your deal with the same lender; it does not itself release extra money. Additional borrowing needs a separate assessment, although your lender may allow you to arrange it alongside a rate switch. Read Product transfer vs remortgage.
Saving for the expense, reducing its scope or comparing suitable unsecured borrowing may also be worth considering. There is no requirement to increase your mortgage simply because you have equity available.
What does it cost to borrow more through a remortgage?
Allow for the cost of changing the mortgage and the cost of repaying a larger loan. Depending on the deal, charges may include:
- Early repayment charges on your existing mortgage.
- Exit or administration fees charged by your current lender.
- Product or arrangement fees for the new mortgage.
- Valuation and legal costs, including any additional legal work.
Some products include a valuation or basic legal package. Check exactly what is included: extra work, such as changing ownership, may still attract a charge. If a fee is added to the mortgage, you will normally pay interest on it while it remains outstanding.
I do not charge a mortgage broker fee. If I arrange your mortgage, I receive commission from the lender on completion. The other costs above may still apply. My remortgage costs guide explains the individual fees in more detail.
Will your monthly payments increase?
If the interest rate and repayment term stay the same, borrowing more increases the payment on a repayment mortgage. With a remortgage, the rate and term may change too, so compare an illustration for the whole proposed loan.
A longer term can reduce the monthly payment compared with a shorter term on the same borrowing and rate, but increases total interest. Check the term remaining today against the proposed term, and ask what you would still owe at the end of the initial deal. A lower monthly figure does not necessarily mean a cheaper mortgage.
How do you arrange additional borrowing through a remortgage?
- Define the amount and purpose. Work out how much cash you need after costs, with a realistic budget for the project or purchase.
- Review your existing mortgage. Check the balance, rate, remaining term, deal-end date and any early repayment charges.
- Assess affordability and compare routes. Review your income, expenditure and commitments, then compare a remortgage with appropriate alternatives.
- Apply and provide the requested evidence. The lender assesses your circumstances, credit history and borrowing purpose. An agreement in principle is not a final mortgage offer.
- Complete the valuation and legal checks. The lender assesses the property, and the conveyancer deals with the legal work for the switch.
- Confirm the completion figures.Once the offer conditions and legal requirements are satisfied, the new loan repays the old mortgage. Any surplus is dealt with according to the lender's instructions and the agreed completion statement.
Have your latest mortgage statement, income evidence, bank statements and details of other borrowing available. The documents and periods covered depend on your circumstances and the lender. Self-employed applicants can also read my self-employed remortgage guide.
You do not receive the money simply because an offer has been issued. Ask your conveyancer when the surplus can be paid and avoid relying on an unconfirmed date for a non-refundable commitment. Valuation queries, extra underwriting and legal issues can delay completion.
For more detail, read How long does a remortgage take? and Do I need a solicitor to remortgage?
What are the risks of borrowing more through a remortgage?
Your home secures the increased borrowing. Consider whether you could maintain payments after an income reduction, unexpected expense or a future rise in mortgage rates.
With less equity remaining, a fall in the property's value could restrict your next mortgage options. In a larger fall, you could owe more than the property is worth. Spending money on improvements does not guarantee an equivalent increase in its value.
Match the borrowing decision to the purpose and how long the benefit will last. A short-lived purchase funded over a long mortgage term may leave you paying for it long after you have stopped using it. Delaying or reducing the expense may be a better outcome than stretching an already tight budget.
Common questions about remortgaging to borrow more
Is this the same as an equity-release mortgage?
No. The phrase “releasing equity” can describe borrowing more through an ordinary mortgage. Later-life equity release includes products such as lifetime mortgages and home reversion plans, with different repayment or ownership arrangements. I do not advise on those products. If you want to consider them, I can refer you, with your agreement, to a specialist equity-release broker. That specialist, not me, would assess suitability and explain their service and any fees. My fee-free mortgage service does not automatically apply to a referred firm's service. Do not assume that the costs or eligibility rules in this guide apply to those products.
Can I release equity without changing lenders?
Potentially, through a further advance or another additional borrowing arrangement your lender offers. Approval is not automatic because you already have a mortgage with them. They will assess the request and its affordability.
Can I remortgage to release equity during a fixed-rate deal?
It may be possible, but early repayment charges and the cost of replacing your current rate can change the calculation. Compare acting now with waiting until the charge period ends or using another suitable borrowing route. Read When should I remortgage?
Do I need a surveyor to visit my home?
Not always. A lender may use an automated or remote assessment, or arrange a physical inspection. The method depends on the lender and property. A mortgage valuation is for the lender's purposes, not a detailed survey of the condition of your home.
What if my house is already mortgage-free?
You may be able to take out a mortgage on an unencumbered property, subject to lender checks. That creates a new debt secured on a home you currently own without a mortgage. Read I own my house outright: can I remortgage?
Get help with your remortgage options
For an ordinary residential remortgage, I can review your existing mortgage, how much you want to raise and what the money is for. I can then explain suitable mortgage options, the costs involved and the effect on your repayments. Approval and the amount available depend on the lender's assessment.
If your needs instead point towards a lifetime mortgage or home reversion plan, I can refer you to a specialist equity-release broker. The specialist would provide any advice about those products and explain their own service and charges.
For an initial conversation, it helps to know your approximate property value, current mortgage balance, deal-end date and the cash amount you need after costs.
Book an initial call or learn more about my remortgage advice.
This guide provides general information, not a personal mortgage recommendation, tax advice or legal advice. Lender criteria and products can change. Examples are illustrative only.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.