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Tenen Haus
> Mortgages
> Equity Mortgage - UK Guide
 In a nutshell
This is a remortgage that allows you to release equity from your property.
Best Mortgage For
Anybody that has built up some equity in their current property and wishes to release it without moving. Certain products are designed for people with no/negative equity to extend their mortgage to release cash that way.
Mortgage Type
An equity mortgage is a remortgage product which allows you to free up some of the cash that you have built up in your property. So, you will be able to find all types of standard mortgage offers (i.e. repayment, interest-only etc.,) and deals (i.e. fixed rates, discounts, trackers, variable rates, capped rates etc.,) here depending on the lender you approach.
Typical Amount to borrow
Many lenders will really focus on the equity you have built up with this kind of deal. So, they will let you borrow sums up the equity limit and nothing more. Others, however, will take a more flexible approach and some will give out equity mortgages of up to approximately 125% of your property value even if you have no/negative equity.
Deposit
The deposit you will have to pay will vary widely from 5% up. But, this will depend on the type of deal you choose and how much equity you have built into your property. In some cases, any deposit is naturally paid by the equity difference between the remortgage you want and the value of your property.
Advantages
An equity mortgage will give you immediate access to cash that would otherwise just be locked up in your home. This is your money - but until recently the only way you could access it was by selling up. With an equity release mortgage you can get some of it right now without having to move. Lenders aren't generally interested in what you want the extra cash for - so you can spend it on anything you like rather than be limited to certain things. This kind of product has become increasingly popular as a loan consolidation option - you can pay off all your debts at once and take advantage of lower mortgage rates at the same time. You can also sometimes borrow more than you would have been able to with your original loan as you have other things to add to the mix such as increases in property values etc.
What to look out for
The worst mistake that people make with an equity mortgage is that they forget about the mortgage element of the product and simply focus on the money they can release. You will be releasing your own money - but you'll pay for it across the mortgage term of your loan (which could be decades) so it could actually cost you a lot more than you think. It's nice to get some cash up front but you do need to take care that you don't over-stretch yourself here. It's all to easy to decide that you want to do a big home improvement project or to buy a new car and use an equity release mortgage to do it but your overall monthly repayments will generally go up the more you borrow. You can actually use this kind of remortgage to your own advantage. If you tell your current lender that you are shopping around for new deals then you might be offered a remortgage deal with them at better rates than you are currently paying. In many cases, lenders will also set up special deals for remortgages so you may have all or some of your fees paid for you - but you also need to check if you have any penalty redemption clauses in your existing product.
Alternatives
You can also release equity from your property via an equity release loan.
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