Remortgaging to release equity

Releasing equity means turning some of the value you’ve built up in your home into cash. For many homeowners, remortgaging is a common route because it uses the property as security, typically with regular monthly repayments.

This guide explains how remortgaging to release equity works, the main options available, and the factors that commonly influence how much you may be able to borrow.

What “equity” means

Equity is the difference between your property’s value and the total amount of debt secured against it.

A simple way to think about it:

• Property value (what the home is worth)
• Minus secured borrowing (your mortgage and any other loans secured on the property)
• Equals equity (the portion of value you effectively own)

Equity examples

• If a home is worth £200,000 and you have £80,000 left on your mortgage, your equity is £120,000.
• If there is also a second charge (a further loan secured on the property), that second charge must be included when calculating total secured debt.

Negative equity

If the property value falls below the total secured debt, you may be in negative equity. In that situation, releasing equity is usually not possible because there isn’t enough value left after covering the debts secured on the home.

Remortgaging to release equity: the main routes

There are two common ways to release equity using a remortgage, depending on your current mortgage position and the amount you’re trying to raise.

1) Full remortgage (swap your existing mortgage)

A full remortgage replaces your current mortgage with a new one. If you’re increasing the loan size, the extra borrowing can be used to release equity.

This route is often used when:

• you want to consolidate existing borrowing into one mortgage
• you want to change the term or repayment structure
• you’re aiming to release a larger amount of equity

2) Second charge remortgage / secured loan (keep your existing mortgage)

A second charge is an additional loan secured against the property, taken out alongside your existing mortgage.

This route may be considered when:

• you don’t want to replace your main mortgage
• you want to borrow against remaining equity while keeping your current mortgage in place
• your circumstances mean a full remortgage isn’t the best fit

How much equity you can release

The amount you can raise depends on a combination of property value, how much equity you have, and how lenders assess affordability and risk.

Loan-to-value (LTV)

Most lenders use an LTV (loan-to-value) ratio, which compares the size of the loan to the property value.

• Lower LTV generally means less risk to the lender.
• Higher LTV usually means stricter checks and potentially different product availability.

Because your existing mortgage balance and any other secured loans reduce the equity available, LTV is often the starting point for what’s realistically possible.

Property value and equity available

Your remortgage amount is influenced by:

• the current value of the property
• the outstanding balance on your mortgage
• any other secured borrowing (including second charges)

If the property value is lower than expected, it can reduce the maximum loan size.

Affordability (income and outgoings)

Even if you have sufficient equity, lenders will still assess whether the repayments are affordable based on your financial circumstances.

Affordability is typically influenced by:

• your income (including how stable it is)
• your monthly commitments (credit cards, loans, existing mortgage payments, childcare costs, etc.)
• your credit history

Purpose of the loan

The reason you want to borrow can affect how lenders view the risk and, in some cases, the maximum loan size.

Commonly, lenders are more comfortable where the purpose is clearly linked to improving or securing the property, or where the funds are used in a way that doesn’t create unusual uncertainty.

Purposes that may be treated more cautiously include spending that could be harder to evidence or outcomes that depend on factors outside your control.

Worked scenarios (simplified)

These examples show the logic lenders often apply, though actual offers can vary depending on product rules, fees, and individual circumstances.

Example 1: Full remortgage with extra borrowing

• Property value: £420,000
• Outstanding mortgage: £0
• Potential borrowing based on LTV: up to 75% (illustrative)

A lender might consider a loan up to £315,000. If you’re using the borrowing to release equity, the cash you receive is the loan amount minus any costs and any amounts used to settle existing debts (if applicable).

Example 2: Full remortgage where you have an existing mortgage

• Property value: £250,000
• Outstanding mortgage: £60,000

If borrowing is limited to a percentage of the property value, the new mortgage amount may be capped. The portion used to repay the existing mortgage reduces the equity cash-out available.

Example 3: Second charge to release equity

• Property value: £180,000
• Outstanding mortgage: £90,000

A second charge is typically assessed against the remaining equity after the main mortgage. The maximum second charge amount may be limited by the overall risk position.

Factors that can affect approval or the loan amount

Even where you have equity, lenders may reduce the amount offered or decline an application based on additional risk factors.

Age

Many lenders have upper age limits for mortgage terms or at the point the loan must be repaid. Different lenders apply different rules, so it’s important to consider how your age affects the structure of the borrowing.

Employment and income type

Lenders generally want confidence that repayments can be maintained.

Income may be assessed differently depending on whether you’re employed, self-employed, retired, or receiving other income types.

Credit history

A less favourable credit profile can lead to:

• lower maximum borrowing
• higher scrutiny of affordability
• product restrictions

Size of the borrowing

Larger remortgages can involve additional underwriting checks and may require specialist products or different criteria.

Property type, condition, and location

Lenders may adjust the value they’re willing to lend against if the property is:

• non-standard construction
• in poor condition or requiring significant repairs
• in an area that increases risk (for example, flood risk)

Property age and build quality

The age and type of the property can influence valuation and lending appetite. If the property doesn’t meet typical lending standards, it may affect the maximum LTV.

Remortgaging to release equity vs other options

Depending on your goals and circumstances, remortgaging may not always be the only route to access home value.

Some homeowners consider alternatives such as:

• equity release products designed for later life
• selling and downsizing to release equity without borrowing
• other forms of borrowing depending on affordability and property suitability

The right approach depends on your timeframe, repayment capacity, and how much flexibility you need.

Key points to consider before you apply

Before remortgaging to release equity, it helps to be clear on:

• how much equity you have after your current mortgage (and any secured loans)
• what LTV your circumstances may support
• whether your income and outgoings make the repayments affordable
• how the loan purpose may be viewed
• whether property value and condition could affect the valuation

Equity release further info

If you’re exploring ways to access value from your home, it can be helpful to compare remortgaging approaches with other equity-related options.

• Equity release on buy to let properties
• Equity release for couples
• Lifetime mortgages – the money explained

Related expert articles:

• Living your retirement with equity release
• Equity release and your estate
• Nine things to do with your equity release
• Equity release on the rise
• Understanding compound or rolled up interest

Get help

If you’d like to understand what may be possible for your circumstances, our brokers can talk you through the options and the information lenders typically need.