Remortgage to Release Equity Lawyers
Legal Expertise for Remortaging to Release Equity
You can remortgage to release or transfer equity if you’re the owner of your home. You’re essentially borrowing more against your property to free up cash.
This means your mortgage will increase and your monthly costs are likely to go up.
It also means you’re taking on more debt, so it’s important to weigh up the pros and cons for all parties involved before proceeding, and it’s important that you seek specialist legal advice from an experienced conveyancing solicitor.
What Does Remortgaging Mean?
If you are in a fixed-rate agreement with your mortgage lender, you will pay a specific interest rate for the entire term of the loan – which is usually two or five years.
Once the fixed term is up, you will need to remortgage.
You can negotiate a new deal with your current provider or start again with a different provider.
It means that you’ll stay in your existing home and use the equity you have in the property as security for the mortgage.
What Is Equity?
Simply put, equity is how much of the home you own.
You can work out your home equity by taking away your remaining outstanding mortgage payments from the value of your property.
For example, you own a property valued at £400,000 and you have £100,000 of mortgage left to pay.
The equity, or the part you own outright, would be £300,000. If you’ve paid off your mortgage, your equity would be the full value of £400,000.
Your equity also includes the initial deposit you put down on the property.
The larger the deposit you put down, the more equity you’ll have. You’ll also have more equity if the value of your property goes up.
Why Remortgage to Release Equity?
There are many reasons why you might want to remortgage to release equity, such as:
- Fund home improvements
- Help your child buy their first home
- Consolidate debts
- Start a business
How Does Remortgaging to Release Equity Work?
Remortgaging to release equity is slightly different from taking out a new mortgage to buy a home.
This is because you’re still living in your home and have probably paid off a large chunk of your mortgage already. In most circumstances, you’ll need a decent amount of equity in your home before you can remortgage.
Just remember that when you remortgage to release equity, you’re essentially borrowing money based on the value of your home.
The loan-to-value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio.
Even with a lower LTV, it still means you’ll be taking on a larger mortgage with potentially higher repayments, which is something to take into consideration before you commit to anything.
What Is the Difference between Remortgaging to Release Equity and Equity Release?
Be mindful that remortgaging to release equity is not the same as equity release.
Equity release is for homeowners over the age of 55 with little or no mortgage who want access to extra funds during their retirement.
Equity release provides a tax-free lump sum of money, or a regular income, in exchange for part of the value of your home.
The amount borrowed is paid back from the sale of your house when the last homeowner dies or moves into permanent, long-term care, and legal ownership is transferred to another party.
What Does a Solicitor Do When You Remortgage?
A conveyancing solicitor oversees the entire remortgaging transaction which includes:
- Requesting the title deeds and mortgage redemption statement from your current lender
- Checking the terms of your new offer and flagging anything important
- Carrying out the required checks and searches
- Receiving the funds from your new lender and ensuring your current mortgage is paid off on time
- Amending and registering your title deeds with the Land Registry to reflect the change of lender
Reach out to Our Expert Lawyers
We’re a full-service conveyancing practice with teams covering every conceivable aspect of property law.
Therefore, if you need support with transferring equity, remortgaging, or any other conveyancing issue, our conveyancing team can provide expert advice and peace of mind.
To speak to one of our expert property solicitors about the legal process of property transfers, you can call us on 0333 433 0275, email us at hello@homepropertylaw.co.uk, or fill in our contact form.
