Property

Start some home improvements or buy an investment property

The past few years of high house price rises mean many people now live in properties worth far more than their mortgages.

A form of remortgaging known in the trade as ‘releasing equity’ lets owners take advantage of the good news. It is the same as in the earlier example about clearing expensive debts. If you have a mortgage worth £180,000 on a property worth £400,000, for example, then as long as your income and other circumstances allow it you can ask your existing or a new lender for a remortgage worth, say, £205,000. The increase of £25,000 will be paid into your bank account when the remortgage goes through.

What you do with the extra money is up to you. But many people remortgage to raise the funds to start some home improvements, build an extension or even use the money for a deposit on a second home or a buy-to-let property. And, as already stated, many people find that if they remortgage from an expensive to a low cost lender their total monthly outgoings hardly rise, even though the amount they have borrowed has gone up.