Accessing Equity – Remortgaging
Another way to access your equity if you don’t want to sell your house is to remortgage by borrowing against it.
If the value of your house has increased and therefore your equity has too, then you can take out a new, larger mortgage that reflects this increase in value.
Say your house has gone up in value from £350,000 to £400,000; you could cash in on this by remortgaging for a higher amount. You might currently owe £250,000 to your mortgage lender, but you could capitalise on your increase in equity by taking out a new mortgage worth, say, £280,000, giving you an extra £30,000 in cash.
There will be various fees you have to pay in order to do so but you should still end up better off than before. Your loan to value (LTV) ratio will have gone down given the increase in the value of your home, but the amount you’re borrowing will go up.
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