At the start of your mortgage term, the bulk of your mortgage payments go towards interest, but over time this reduces and you pay more off the principal amount. You may find yourself in a position where you own a larger portion of the property or equity as it is sometimes known.
If you need a little extra money at any point, remortgaging to release equity is a great way to access funds. It’s often cheaper than credit card borrowing or personal loans. In this guide, we will provide an overview of a capital raising mortgage to help you understand your position.
If you’re thinking about extending your home or renovating, releasing equity from your home is a great way to raise the funds. This could be useful for a new kitchen, a loft conversion or an extension.
Once your current mortgage term comes to an end, you’ll have the opportunity to remortgage your property and secure a fixed interest rate. As part of this application, you can also apply to borrow more money by releasing equity from your home.
Remortgaging and releasing equity is simple enough if you have come to the end of your fixed mortgage term. At the end of this period, lenders will switch you to their standard variable rate. Most lenders expect you to remortgage during this time to fix your mortgage payments for a defined period.
If you’re in the middle of a mortgage term, remortgaging to release equity will be more complicated. There may be early repayment fees to consider that could make the cost of borrowing additional money less worthwhile. In this instance, a personal loan might be more affordable. You could then wait until your mortgage term comes to an end, remortgage and repay your personal loan with released equity.
Working with a mortgage broker will help you to understand your position and make sure you choose the best option for your financial situation. Get in touch with Niche Mortgage Info today to find out more.