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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Releasing equity through a remortgage means borrowing more than you currently owe on your home, using the difference between your property’s value and your existing mortgage balance. The extra amount is added to your new mortgage and repaid the same way as the rest of it, over the mortgage term.
What does releasing equity through a remortgage mean?
Equity is what’s left of your property’s value once your mortgage balance is taken off. If your home is worth £250,000 and you owe £150,000, you have £100,000 of equity. Remortgaging to release equity means increasing your mortgage, for example to £180,000, and taking the extra £30,000 as a lump sum, secured against your home just like the rest of the loan.
This is different from a further advance, which is extra borrowing from your existing lender without necessarily changing your whole mortgage, and different again from a second charge mortgage, a separate loan secured behind your first mortgage, often considered when leaving your current deal would trigger large early repayment charges.
How much equity can you release?
The amount available depends on your property’s value, your current balance, and the lender’s maximum loan to value (LTV) for your circumstances. LTV is your mortgage amount divided by your property’s value: borrowing £180,000 against a £250,000 home is 72% LTV. Lenders set their maximum LTV in bands, often in 5% steps, and the amount you can release sits within whatever gap remains between your current LTV and that maximum.
| Property value | Current balance | Current LTV | Maximum LTV (illustrative) | Equity potentially available |
|---|---|---|---|---|
| £250,000 | £150,000 | 60% | 80% | Up to £50,000 |
| £250,000 | £200,000 | 80% | 80% | None at that lender |
| £300,000 | £120,000 | 40% | 75% | Up to £105,000 |
These figures are for illustration only. Actual maximum LTV varies by lender and by individual circumstances, including credit history.
What can released equity be used for?
There’s no restriction on how you spend released equity, though lenders may ask the purpose during the application. Common uses include home improvements, helping a family member, buying another property, or consolidating other debts. Whatever the purpose, the borrowing itself works the same way: it’s added to your mortgage and repaid over the term.
Releasing equity through a remortgage, a further advance, or a second charge
There are three main routes to accessing equity, and they aren’t the same thing:
| Route | How it works | Worth knowing |
|---|---|---|
| Remortgage releasing equity | Your whole mortgage is replaced with a larger one on a new deal | May trigger early repayment charges if you’re still in a deal period |
| Further advance | Extra borrowing added by your existing lender, alongside your current deal | Avoids disturbing your existing rate, but is a separate agreement with its own terms |
| Second charge mortgage | A separate loan from a different lender, secured behind your first mortgage | Often considered when ERCs on the main mortgage would be costly to trigger |
Which route makes sense depends on where you are in your current deal, whether your existing lender offers a further advance, and how much you need to borrow. A specialist adviser can compare these against each other rather than assuming a full remortgage is automatically the right route.
What are the risks of releasing equity?
The main risk is straightforward: you owe more, secured against your home, for longer. A few things worth weighing up:
- Total interest. Borrowing more, or extending your term to make it affordable, usually means paying more interest in total over the life of the mortgage.
- Securing previously unsecured debt. If you’re using released equity to pay off credit cards or loans, that debt moves from unsecured to secured against your home.
- Affordability over time. Lenders stress test affordability against higher rates, but your own circumstances, income or health, can change over a long mortgage term.
- LTV and future options. A higher LTV after releasing equity can narrow your choice of deals at your next remortgage.
Releasing equity with bad credit
If you have a CCJ, defaults, or missed payments on your credit file, releasing equity is often still possible, but two things typically change: the maximum LTV a lender is willing to offer may be lower, and the pool of lenders willing to consider the application may be smaller. Our releasing equity with bad credit page covers how much can typically be released, and what lenders tend to look at, in more depth.
Is equity release the same as a lifetime mortgage?
No, and this is a common point of confusion. “Equity release” in the mortgage industry usually refers to lifetime mortgages, a specialist product typically for older homeowners where the loan, plus interest, is usually repaid when the home is sold, often after death or a move into long-term care. This is a different product from remortgaging to borrow more within a standard mortgage, needs specialist advice, and isn’t something covered by ordinary remortgage guidance. If this sounds closer to your situation, our later life remortgage with bad credit page explains how the options differ.
What this means if you’re remortgaging with adverse credit
If you’re considering releasing equity and have adverse credit, get your statutory credit report first so you and any adviser know exactly what a lender will see. If part of the reason is clearing existing debts, it’s worth getting free guidance from StepChange or National Debtline alongside any mortgage conversation, since consolidating debt into your home is a decision with long-term consequences, not just a short-term fix. See how much you might be able to remortgage for to understand the LTV side in more detail.
Frequently asked questions
Is releasing equity through a remortgage the same as equity release?
No. Releasing equity through a standard remortgage means borrowing more against your home within a normal mortgage, which you keep making monthly repayments on. Equity release usually refers to lifetime mortgages for older homeowners, a different, specialist product that isn’t covered on this page.
How much equity can I release?
It depends on your home’s current value, what you still owe, and the lender’s maximum loan to value for your circumstances. There’s no fixed percentage that applies to everyone, and bad credit can affect the maximum a particular lender offers.
Can I release equity if I have bad credit?
It’s often possible, though your choice of lender may be narrower and maximum loan to value limits can be lower. Lenders also tend to look more closely at affordability when a larger amount is being released. See our releasing equity with bad credit page for more detail.
Is releasing equity to pay off debts a good idea?
It depends on your circumstances. It can lower monthly outgoings, but it moves unsecured debt onto your home and a longer term can mean more interest overall. A regulated adviser has to consider whether it’s appropriate for you specifically before recommending it, weighing that trade-off against your other options.