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Remortgage or equity release?

If you want to top up your income in later life, you could borrow against the equity in your home. Remortgaging and equity release are two possible ways to do it – and in this article, we take a closer look at both options.

What is equity?

Basically, equity means the market value off your house minus any outstanding mortgage debt. For example, if your home is worth £200,000 and your mortgage is £150,000, you have £50,000 of equity.

Your equity can increase if…

  • the overall value of your property increases compared to when you bought it;
  • You make repayments overtime
wooden model houses on stacked coins

Borrowing against equity

If you have equity in your home and you’d like to access some of the value of that equity, there are different ways to do it.

One option is to move or downsize to a smaller, cheaper property. That means you’d pay off any remaining mortgage and you could keep any amount left over (minus any solicitor costs and other fees, of course). But what are your options if you don’t want to sell the home you love?

Well, you could borrow money against the equity in your home instead. Many people decide to do this to improve their financial situation in retirement or fund home improvements. And depending on your age and circumstances, you could consider releasing money from your home through remortgaging or taking out an equity release plan.

piggy bank and a blackboard with question marks on

Remortgaging

If you’re wondering how to remortgage to release equity, it’s little bit different to taking out a completely new mortgage when you buy a property. That’s because you have already brought your home – and you’ve probably been paying off your mortgage for a while, or you may have paid it off altogether.

This means you’ve built up equity in your property over time – and that’s important because the equity is what you’re borrowing against here. In general, the more equity you have, the better position you’re in – because the amount of money you owe compared to the value of your home will be lower. But for older borrowers, there are many other things to consider when it comes to remortgaging to release equity…

Can you remortgage in later life?

If you’re retired or approaching retirement, the truth is that it isn’t always easy to remortgage to release equity. That said, remortgaging can still be an option.

There are no hard and fast rules about age limits – instead, individual lenders will often have their own maximum age caps, so it’s worth looking at different lenders.

But eligibility for remortgaging to release equity in later life isn’t just about age – lenders will also assess affordability. You will need to prove that the income from your pension would be more than enough to cover the repayments on the mortgage. In order to make a decision, they’ll look at the following:

  • The amount you owe compared to the value of your home
  • Your income – for example, from pension and savings
  • Your monthly outgoings
  • What the money is for
  • Your credit history

Affordability is something you should also think carefully about before you decide to remortgage – so it’s important to make sure you have enough income to make your monthly repayments. Speaking to an independent financial adviser will help you gain a better understanding of whether remortgaging is suitable option for you to release money from you home.

couple on vacation looking at a mobile phone

Equity release

For homeowners aged 55 or over, equity release is another possible way to release cash tied up in your home. Basically, it allows you to unlock tax-free cash from the value of your home – either as a lump sum or smaller amounts as and when you need them. Find out more about how it works in our equity release guide.

How much you can borrow will depend on the value of your home, state of health and age. But no matter how much cash you release, with a lifetime mortgage (the most popular equity release scheme) you won’t have to worry about making any monthly repayments during your lifetime. Instead, the loan plus interest is repaid when your home is sold, either when you pass away or move into permanent care.

See how much cash you could unlock with our FREE Equity Release Calculator

Could equity release work for you?

If you’re asset rich but cash poor, then equity release could just be a way to give your finances a welcome boost in retirement. Even if you still have a mortgage on your property, you could still be eligible – it just means that the money you unlock will pay off your mortgage first. Any money left over after that is yours to spend as you wish.

Equity release is a big decision and it isn’t right for everyone, so make sure you consider all other options before you go ahead. You should seek independent expert advice too, so you can be confident that you’re making the right decision.

Remember – equity release will reduce the value of your estate and the amount you’re able to leave as an inheritance when you die. It may affect your tax position and your entitlement to state benefits

couple talking with an adviser

Always get expert advice

If you’re considering remortgaging to release equity or equity release to access the money tied up in your home, remember that it’s a big commitment – so you need to think about it carefully. It’s important to seek advice from an independent expert adviser to help you find out which option is best for you.

The SunLife Over 55 Equity Release Service is here to lend a hand if you’re wondering whether equity release is right for you. Just give us a call and our friendly team will take you through the next steps.

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, equity release, pet insurance, home insurance, car insurance, ISAs and Will writing services

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

The funeral services are arranged and provided by Dignity Funerals Ltd which is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.