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Releasing equity from your house

Posted by Fojul Uddin on August 8, 2017
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As a homeowner, you’re always looking for new ways in which you can take advantage of high property prices and low interest rates currently seen in the UK housing market. With property prices rising and mortgages historically low, homeowners are keen to snatch up equity from their house.

What is equity, and why do I want it?

Equity is the share of the value of your property that you own. So, if your home is worth £200,000 and your mortgage is £150,000, that leaves £50,000 that is your equity. For many homeowners, there’s a serious amount of cash that they could benefit from – but how can you access this equity and take advantage of opportunities it brings?

Over 55? Look at a Lifetime Mortgage

This is one of the most common and widely-used methods of releasing equity from your house – the Lifetime Mortgage allows you to borrow up to 60% of the value of your house and release the money as one lump sum. The catch is that interest is accrued on the amount that you borrow, but unlike a normal mortgage, you can allow this interest to be ‘rolled up’ and added to the loan. When you come to sell the house, this loan and the accumulated interest is taken from the final sale cost.

Selling is a quick and simple option – with one major drawback

It stands to reason that the easiest and quickest way to release equity from your home is to sell it! You recoup your deposit as well as the mortgage/value difference (if the market is on your side). Of course, there’s one major problem with selling to release equity – usually this equity goes towards a larger, more expensive property. So the idea you can sell your home and gain hard cash is great, but leaves you without anywhere to live. However, if you’re downsizing to a cheaper or smaller property, there’s a good chance your equity will prove to be a nice windfall when the process is completed.

There’s always Remortgaging

Remortgaging is another way that thousands of UK homeowners gain access to their equity. Borrowing against the value of your equity in the form of a larger mortgage isn’t a new trick but is one that has its benefits: you can effectively cash in on the rise in the value of your house without having to move. The benefits here are numerous: you can simultaneously climb the loan-to-value bands, cut monthly repayments by moving to a cheaper mortgage, and release some money for home improvements, remodelling or anything else you like. Be sure to check whether you lender has any early repayment charges applicable to your mortgage.

When in doubt, ask the experts

Adjusting the financial balance of your house is a difficult decision and shouldn’t be taken on lightly. Luckily, iSell has some of the industry’s most experienced support staff on hand to handle any questions, scenarios or concerns you may have about releasing equity from your house. Call us today to see how we can help you.


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