A remortgage to release equity is a great way of utilising funds tied up in a property. You can use funds to further invest in property, a holiday or home improvements, the choice is yours. We’ve outlined the top 5 tips on how to get the most from your remortgage.
- Check how much equity you have
The property you wish to remortgage needs to have equity. If you don’t have enough equity in your property then you simply can’t remortgage. Check your annual mortgage statement to see how much you currently owe on your mortgage.
You currently owe £100,000 on your mortgage.
Your property is worth approximately £200,000.
This means you would have £100,000 in equity.
A lender wouldn’t allow you to access the whole £100,000 as this would then be a 100% mortgage. The amount you’re able to access largely depends on your lender and your current income.
- Get your property valued
To get an accurate value of how much your home is worth, get your property valued. An easy way to do this is to get a valuation from an estate agent. Most estate agents will usually offer free valuations. A valuation will give you a good indication of how much your property is worth. You can then calculate how much equity you have by deducting your mortgage balance from the total property value.
It’s important to note that your lender will usually carry out a mortgage survey to establish their own value. That said, your mortgage valuation and an estate agents valuation shouldn’t vary too much. Although a lender will value the property, it’s important to establish a value prior. This is because if your property doesn’t hold equity, you will waste a lot of time and money. Your credit file may also be impacted if you apply for a mortgage and get declined.
- Inform your lender what you’ll use the equity for
Some lenders will want to know what the equity will be used for. If you wish to purchase another property such as a buy to let, then you may be offered preferential rates through the same lender. This can save you a lot of time and they may also reduce your fees, such as mortgage survey fees and arrangement fees.
If you’ll be using the equity for home improvements such as a new kitchen or bathroom, then your in theory investing the same money back into the property and improving the value. By improving the value, you can gain the lost equity back.
- Staying on the best mortgage rate
When you remortgage you are in theory taking out a new mortgage. It’s a good time to select the best mortgage rate possible to ensure you don’t overpay and save money over the term. If you’re already on an unbeatable mortgage rate it may not be wise to remortgage.
- Using a mortgage broker
Using a mortgage broker can enable you access to the best deals available. Brokers that are independent usually have access to the majority of lenders and can do all the digging for you. Brokers can also prepare your application so the remortgage process runs smoothly. Websites such as Expert Mortgage Advisor can put you in touch with the best suitable brokers depending on your situation. Furthermore, it’s free to use and can put you in touch with a mortgage broker instantly.