If you are eligible, you could remortgage to raise some additional money by borrowing more money in addition to your existing loan on your home. The amount that you can borrow against your home will depend on various factors including:
- The property value. One of the most common reasons people choose to remortgage is because their house has gone up in value.
- The equity that you have in the property – this is how much of the house that you own outright. It is calculated by removing the amount of the loan outstanding from the value of the property. For example, if your house is worth £500,000 and you have a mortgage of £300,000 outstanding then your equity will be £200,000.
- Your credit history. Lenders will want to run a credit check on you before making you an offer.
- Your affordability – The amount that you are able to borrow will also depend on your circumstances. The lender will carry out affordability checks as part of the application to ensure you can keep up with the repayments for the mortgage considering your income and outgoings.
- Theoretically you can borrow as much as will the maximum Loan-to-Value (LTV) will allow. Some lenders offer 95% mortgages and the majority will offer 90% mortgages but for remortgages the maximum LTV they are usually willing to lend when you release equity is around 75 – 85%.
Loan-to-Value (LTV) is essentially the size of your mortgage or loan in relation to the value of the property. It is shown as a percentage. For example, if you have a mortgage offer with an LTV of 80%, your mortgage will be up to 80% of the property value.
