How Does Remortgaging to Release Equity Work?

A small wooden model of a house with stacks of coins around it.

If you’ve built up equity in your home, remortgaging can let you access some of that value as cash. It’s often used to fund renovations, support family or consolidate debts. Alternatively, equity release options like the product offered by Saga Equity Release may suit older homeowners who would prefer not to make monthly repayments.

What's on this page?

Reasons for remortgaging
How to release equity by remortgaging
How much can you release?
What costs should you expect?
The pros and cons
How to improve your chances of approval

Remortgaging can release equity you’ve built up in your property

If you want to raise money for home improvements, to help support your family or pay off outstanding debts, then remortgaging to release equity might be a good option. But is it the best solution for you? Let’s look in more detail.

What does remortgaging mean?

Remortgaging means taking out a new mortgage loan on your existing property. You stay in the same home and use the equity you've built up in the property as security for a new mortgage.

You may want to remortgage to improve the deal you have with your current provider or move to a new lender, so your repayments are lower.

You can remortgage to release money by taking out some of the equity you've built up. This could be possible if you’ve paid off enough of your existing mortgage already or if a rise in house prices has created extra equity in the property. A new mortgage would act as a loan to give you access to your cash, rather than it being tied up in your home's equity.

Remortgaging could mean that you're taking on more debt if you’re borrowing more against your property. If you can't meet the repayments, you are at risk of losing your home, so you need to carefully consider whether this is the best option for you.

What is home equity?

Home equity is the difference between what your home is worth and what you owe on your mortgage. It can grow over time as you pay off your mortgage and if your home's value increases.

How do you calculate home equity?

To work out your home equity, subtract what you still owe on your mortgage and any secured loans from your home's current value.

Example:

Your home is worth £300,000.
You owe £150,000 on your mortgage and have £10,000 in secured loans.
£300,000 − £160,000 = £140,000 equity.

Reasons for remortgaging to release equity

Remortgaging to release equity lets you access cash tied up in your home. People often do this to help pay for:

Home improvements. Such as building an extension or fitting a new kitchen.
Debt consolidation. To pay off loans or credit cards with high interest rates.
Education costs. School or university fees for children or grandchildren.
Care costs. To help cover care home fees for yourself or a loved one.
Helping family buy a home. By gifting or lending money for a deposit.
Property investment. Such as a deposit for a buy-to-let mortgage.

How to remortgage to release equity

To release equity through remortgaging, you’ll usually need to have built up a good amount of ownership in your home.

If you’ve lived in your home for a few years and have been steadily paying off your mortgage, your equity may have grown. With enough equity, you can start exploring remortgaging deals that let you access some of that value as cash.

What happens when you remortgage to release equity?

When you remortgage to release equity, you take out a new mortgage on a home you already own – either fully or partially. This lets you borrow more than what you currently owe, giving you access to extra cash.

Example:

You bought a house for £500,000 with a £100,000 deposit and a £400,000 mortgage.
Over time, you’ve paid off £300,000 of the mortgage, so you still owe £100,000.
You decide to remortgage and take out a new loan for £150,000.
This means you borrow an extra £50,000, which you can use however you like.

You’ll need to make sure you can afford the new monthly payments. If you fall behind, your home could be at risk of repossession.

How to release equity from your home by remortgaging?

If you want to remortgage and release equity, you should speak to your existing lender to see how you can improve on your deal. Alternatively, you could look at deals from other lenders.

How much you can borrow and whether you'll be accepted depends on the same criteria as applying for a new mortgage.

A lender will want to know about your finances, your credit score and your ability to make the repayments before they agree to lend you money.

How much equity can you release when you remortgage?

The amount of equity you can release when remortgaging depends on several factors:

How much equity you have in your property.
The value of your home.
Your financial circumstances – income, ability to make repayments and credit rating.
Your age – some providers may be more reluctant to lend to older borrowers.

Comparison sites and lenders often have remortgage calculators to help you work out how much you can borrow. But you may want to chat with a mortgage broker to get the full picture.

How does loan-to-value ratio impact remortgaging?

The amount and the interest rate a provider will offer on a new loan will be shaped by the loan-to-value ratio (LTV) of your home.

LTV is the difference between the size of your mortgage and how much equity you have in your home. It’s usually shown as a percentage.

Example:

You buy a house for £100,000 and have a deposit of £25,000.
You need a mortgage of £75,000.
The LTV would be 75%, and you would have £25,000 in equity.

As you pay off the remaining £75,000 in monthly instalments, the amount of equity you have goes up and the LTV drops. If the value of your house increases over time, the LTV reduces further. A lower LTV usually means you will get a better interest rate.

If you decide to remortgage, your mortgage provider will use the LTV of your property to work out the interest rate they'll charge. Remortgaging when your house value has increased or when you have paid off a higher percentage of your original mortgage can make you more attractive to lenders.

Most providers won't remortgage properties with an LTV higher than 75%. That’s because there isn't enough equity to secure a loan against. If you are offered a remortgage with a higher LTV, interest rates are likely to be higher to reflect the increased risk.

What costs should you expect when remortgaging?

When you remortgage, there may be fees to pay, and it’s worth knowing what they are upfront. These can include:

Early Repayment Charge (ERC). If you're on a fixed rate or tracker mortgage, you might have to pay an ERC if you switch before the deal ends.
Legal fees. You’ll need a solicitor to handle the paperwork and make sure the mortgage transfer is done properly.
Valuation fees. Your new lender will want to check your home’s current value to work out how much equity you have.
Admin fees. Cover the cost of your current lender sending your solicitor the title deeds. If charged, this fee is usually interest-free.
Arrangement fees. Charged by the new lender to set up your mortgage. You can often choose to pay this upfront or add it to your loan.

The exact fees depend on both your current lender and the one you’re switching to.

How does remortgaging affect your repayments?

If you borrow more money against your home, your monthly payments may go up, or your mortgage term might get longer. Either way, it could increase the total cost of your loan.

However, if your loan-to-value (LTV) ratio is lower, meaning you own more of your home, lenders may offer you a better interest rate. This could help reduce your monthly payments, so the overall impact might not be as big as you'd expect.

Can you remortgage to buy another property?

Yes – if you remortgage to release equity, you can use the money however you like. If you’ve built up enough equity in your home, you could use it as a deposit for another property or even buy one outright.

However, keep in mind:

Lenders may ask for a larger deposit on a second property.
Interest rates might be higher for extra properties.
Fees may apply, including early repayment charges, arrangement fees, legal costs, and valuation fees. This is especially relevant if you still have a mortgage on your current home.

If you're thinking about buying another property, it’s a good idea to get professional advice. You’ll need to consider the tax and income implications of using equity to fund a second home.

What are the pros and cons of remortgaging to release equity?

Some of the pros of remortgaging to release equity:

You can remortgage to release money and get access to cash that would otherwise be tied up in your property.
You can use the money to pay for immediate needs such as school fees or to fund home improvements.
If you have built up significant equity in your home, remortgaging might not negatively impact your LTV. This means you may qualify for better interest rates on a new deal.

Some of the cons of remortgaging to release equity:

If you are borrowing more money, your monthly repayments might be higher.
If you are borrowing over a longer period, you will end up paying more in total.
If you can't afford the repayments, your home could be repossessed.
Changing from your current mortgage may mean you face early repayment charges.
If house prices fall, you could fall into negative equity – where the cost of the outstanding loan is higher than the value of your home.

What are the alternatives to remortgaging?

Releasing equity by remortgaging is not the only way you can access money from your property. Consider the following alternatives:

Borrowing more money from your existing mortgage lender. You might be able to borrow more at your existing mortgage rate or at a competitive rate. This allows you to avoid early repayment charges or rearrangement fees and can be more straightforward than remortgaging.
Personal loan. These might have a higher interest rate, but the loan is paid off quicker, which could work out cheaper than remortgaging.
Money transfer credit card. You could transfer smaller amounts from a money transfer credit card to your bank account using a card that offers 0% interest rate for a certain period. You should pay the amount back in full before the end of the 0% interest period to avoid higher interest rates.
A joint mortgage. If you're thinking about remortgaging to help a child buy a property, you could consider a joint mortgage that would allow them to borrow more based on both your incomes.
Equity release. The most popular type of equity release is a lifetime mortgage, which is a loan secured against your home. This is available when the youngest homeowner is 55 or over. It provides tax-free cash based on your age(s) and the value of your home, which must be worth at least £70,000. This doesn’t need to be repaid until your home is sold (usually when the last homeowner dies or goes into permanent long-term care), but this will reduce the value of your estate and may affect your entitlement to benefits.

Is remortgaging to release equity right for you?

If you're over 50, remortgaging to release equity could help with retirement plans, home improvements or supporting family. But it also means borrowing more money, which could affect your monthly budget – especially if you're retired or planning to retire soon.

It’s important to think about how this might impact what you leave behind for loved ones. Before deciding, speak to a financial adviser. They can help you understand the costs, risks and long-term effects.

How to improve your chances of approval

There are a few ways to improve your chances of being approved for remortgaging:

Boost your credit score. With a strong credit score, you show lenders that you’re a low-risk borrower.
Reduce existing debts. High debt-to-income ratios can be a red flag to lenders. If you can, reduce your debts before applying.
Get accurate property valuation. This confirms your LTV and how much equity you can release.
Consider a broker. Brokers can find lenders to suit you, especially if you've been declined before.

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Important

Your home may be repossessed if you fail to repay your mortgage. Saga Money may receive payment from Tembo if you get a mortgage offer via the Saga Mortgages service. This will not affect the amount you pay for the service.

Saga is a registered trading name of Saga Personal Finance Limited, which is registered in England and Wales (company number 3023493). Registered office 3 Pancras Square, London, N1C 4AG. Saga Personal Finance Limited is authorised and regulated by the Financial Conduct Authority under the registration number 178922.

Tembo Money Limited (12631312) is a company registered in England and Wales with its registered office at 18 Crucifix Lane, London, SE1 3JW. Tembo is authorised and regulated by the Financial Conduct Authority under the registration number 952652. Tembo Money was awarded Best Mortgage Broker at the British bank awards in 2022, 2023, 2024 and 2025.