5 things you can do when you remortgage to release equity:
When you remortgage, if you have built up equity in your house, you can consider increasing your mortgage to gain access to this money. When you do this, the cash is tax free and is yours to spend on pretty much on whatever you need.
See below the 5 most common ways to spend the money released when remortgaging:
1. Making house renovations
Whether you want to build a loft extension, add a conservatory, reconfigure your rooms or get a new bathroom, finding spare cash to make home improvements can be challenging. Borrowing an additional loan through your mortgage can help pay for these larger home projects. Using your mortgage to renovate or make home improvements is a sensible way to use this cash, as completing the work could also add value to your home.
2. Buying another property
If you have paid off a good chunk of your mortgage, you may be able to remortgage and release equity to buy another home, either for the deposit, or to pay for it outright. This could be to buy an investment property or even that holiday home that you’ve always dreamed of. Of course, if you do this, your monthly mortgage repayments will increase and you may even have a second mortgage on top of it to pay, so you need to make sure it’s affordable. Using released equity to buy a second property can be an effective way to invest money that would otherwise be tied up, however it’s important to seek advice from a financial adviser, to make sure it will be feasible. Find out more about buying a second home.
3. Supplementing your income
In more financially challenging times, it can be hard to find spare cash when something goes wrong, and yet, something does always seem to go wrong. Although remortgaging to supplement your income isn’t a permanent solution and shouldn’t be relied upon, having the cash in your bank may give you the peace of mind that you have a bit of spare money accessible in case of emergencies.
4. Help a family member
A fairly common reason to release equity from a mortgage, is to help out a child. When it comes to ‘bank of mum and dad’ you’re forever paying out for your children, whether it’s a new pair of trainers, the latest games console or bigger gifts such as buying them a car, paying for their student loan, or even helping to get a deposit for their own house. When you remortgage to access money tied up in your house, you can do any of these, just be sure they say thank you!
5. Pay for a wedding
If you decided to buy a house with your other half, before getting hitched, then remortgaging to release equity to pay for a wedding is something you can consider. Weddings can be a huge expense, even when you’re trying to keep the costs down. Having the money in savings is hard to achieve, especially when it’s likely you’ve already put most, if not all, of the savings you had towards your house deposit. Getting the lump sum of cash in your bank account can be spent towards your wedding and you can rely less on using things such as loans or credit cards to pay for the ever-mounting costs.
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