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Experienced Mortgage Advisors - Remortgaging to Raise Capital | When the Bank Says No
Raising funds for a business venture or personal use is tricky, but homeowners who have paid a large portion of their outstanding mortgage balance have a solution: remortgage to release equity. This means extending your current mortgage with your existing lender and borrowing money against your home to release funds. But remortgaging isn’t simple – equity release options can be numerous and difficult to navigate.
You’re not alone. Our experienced remortgaging advisors are here to explain the options available to you. When it’s time to buy a second home, look no further than us for a mortgage adviser. We take the stress out of your mortgage deal.
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Why remortgage to release equity?
You can release equity remortgaging the same property for the following reasons:
- Business – It’s not uncommon to release equity so you can raise capital for business ventures.
- Home improvements – Fund extensions, renovations, or upgrades to your home.
- Consolidate debts – Use your secured loan to pay off multiple existing loans at once, replacing it with a single mortgage debt. Beware of early repayment charges.
- Retirement – With a lifetime mortgage type of equity release, you can spend the rest of your life comfortably in retirement with no monthly repayments, as the funds will be recovered via the sale of the property after death.
- Better interest rates – A new mortgage or a personal loan charges more interest. Renewed mortgage interest is a secured loan, making it much lower risk to mortgage lenders.
- Higher borrowing potential – When you borrow money, there is typically a heavy price to pay. But depending on how much equity you’ve generated over the years, you can access high amounts for relatively little cost.
Choose our advisors for equity release options
Releasing money via equity release may sound scary to some, considering it’s loaned against the value of your home, but it can be preferable to taking out a personal loan. For one, mortgage interest tends to be much lower, and depending on the type of equity release, you may not even have any monthly repayments to make at all.
When the Bank Says No has a team experienced with navigating complicated mortgage deals, as well as a network of specialist lenders who deal with clients looking for alternative mortgage solutions. Let us create a streamlined mortgage experience, from comparing deals to preparing the application.
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When you think you’ve hit that brick wall and have all but given up hope of finding mortgage finance, When the Bank Says No are here to turn your ‘No’ into a ‘Yes’ with sound mortgage advice. We have access to a range of specialist lenders, including institutions that provide commercial mortgages, and who are willing to help those that the High Street banks just won’t touch. Get in touch today and see how we can turn your dreams into a reality.
When the Bank Says No has helped homeowners across the country remortgage their homes to fund commercial ventures. Not only can this be a great way to raise funds, but it can also result in lower interest rates than standard business loans using a fixed-rate mortgage product, so you could even save money. If you want to get started, we can’t wait to hear from you. Our advisors will explain everything you need to know about the remortgaging process and identify the right mortgage product for you across the whole of the market with an appropriate mortgage term. We allocate you a relationship manager who will stay with you throughout your journey, guiding you through the application process until you achieve the outcome you want.
Frequently Asked Questions
How does remortgaging to release equity work, and what are the long-term financial implications?
Remortgaging to release equity involves taking out a new mortgage that is larger than the existing mortgage. The difference between the two is paid to you as a lump sum, commonly used for purposes such as home improvements, paying off a personal loan, or gifting money to a family member.
In a sense, you’re getting a refund for the money you’ve been spending by selling your share of the home. You now owe debt secured against the home, which in turn puts you in a better position than when you opened a new mortgage (due to your increased assets).
The implications of remortgaging are as follows:
- More interest – Your loan size increases overall, meaning so does your overall interest.
- Higher mortgage repayments – Your monthly payments may increase, unless you offset this with a lower interest rate deal or extend the term. Extending the term, of course, results in more interest overall.
- Arrangement fee – You may have to pay an arrangement fee on the new mortgage deal, plus legal and valuation costs.
If I release equity, will my monthly repayments increase?
It depends on the type of mortgage deal:
- Standard mortgage repayments – Your outstanding mortgage balance rises with the same mortgage term and interest rates. Monthly payments usually go up as a result, but they could stay similar or fall if you get a good deal on the new interest rate.
- Lifetime mortgage – A lifetime mortgage has no compulsory monthly repayments. Interest in rolled up and settled when the property is sold after death.
Whilst equity release is effective at paying off outstanding debts, beware not to add to the stress of your obligations by incurring early repayment charges.
I’m looking to raise capital for my business. Are there mortgages available for this purpose?
Yes, these are called capital raising mortgages. They are a form of equity release that increases your outstanding mortgage balance. If your current lender is unwilling to remortgage, then you’ll need to look elsewhere with a solid business plan and an up-to-date property value before you start, as well as a specialist broker. The number of mortgage lenders is definitely more limited than if you were remortgaging for personal use, and the lending criteria are different, but it’s certainly possible to find a suitable option. Our team of specialist remortgaging advisors can assess your circumstances and determine the best approach going forward. With our team, you can fund your business venture with your best foot forward! You can also rest assured that we will always be looking to save you money!
How will my equity release be affected by property prices or negative equity?
Your equity is based on a percentage and is levied against the value of your home:
- Standard remortgage – Lenders cap the amount available at a set loan-to-value. If the price of the home rises, then your LTV falls, allowing you to borrow money at a higher rate. If house prices fall, then the opposite happens. Most lenders won’t exceed 80 – 85% LTV on a capital-raising mortgage, leaving a buffer against moderate price falls. If you slip into negative equity, your remortgaging request may be rejected.
- Lifetime mortgage – The provider sets a maximum percentage of your property value and your age. The older you are, the higher percentage of equity release you’re capable of. Furthermore, most lifetime mortgage deals reduce remaining equity.
Can I release equity from a mortgage-free property, and how does it differ from remortgaging?
When you remortgage to release equity, you are effectively renewing an existing loan. A mortgage-free property has no loan, meaning you have full equity. This means that if you were to take out a new mortgage, it would be called an “unencumbered mortgage”. You’re starting on a clean slate, and as such, you have access to a wide range of new lenders who offer lower interest rates, fantastic terms and robust capital raising options.
Can I use a capital raising mortgage to invest in a new business or expand an existing one?
Yes. It’s not uncommon for business owners to remortgage to release equity. Remortgaging, depending on how much equity you have, can give you a massive infusion of capital that can be used to start up, expand and otherwise stimulate your business.
It is worthwhile pointing out, however, that it differs greatly from a business loan. When you remortgage to release equity, you are liable and fully responsible for making mortgage payments.
Can I release equity from my home for a business start-up?
Yes! Some lenders will be prepared to consider applications from those who are looking to release equity from their home to secure funds for a business start-up if your property value supports this. The list will inevitably be smaller than if you were looking for a standard remortgage, but that’s not to say there aren’t competitive and highly suitable commercial mortgages available. Speak with our remortgaging specialists today, and we’ll help you find an effective solution with a business mortgage that suits your needs.
What are the pros and cons of a remortgage to release equity compared to a further advance?
The following table will pit equity release against further advances:
Feature | Remortgage to Release Equity | Further Advance |
Lender Options | Any lender | Existing lender only |
Interest Rates | It may be lower with a new deal | Often higher |
Borrowing Limit | Potentially higher | Usually more limited |
Fees | Arrangement, legal, valuation fees | Typically lower fees |
Process Time | Slower | Faster |
Deal Impact | Replaces the current deal | Keeps the current deal |
Complexity | One main mortgage | Two separate loan parts |
Professional remortgaging guidance for business use.
When the Bank Says No has helped homeowners across the country remortgage their homes to fund commercial ventures. Not only can this be a great way to raise funds, but it can also result in lower interest rates than standard business loans using a fixed-rate mortgage product so you could even save money. If you want to get started, we can’t wait to hear from you. Our advisors will explain everything you need to know about the remortgaging process and identify the right mortgage product for you across the whole of the market with an appropriate mortgage term. We allocate you a relationship manager who will stay with you throughout your journey, guiding you through the application process, until you achieve the outcome you want.
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We feel so fortunate to have found WTBSN
We found WTBSN after landing in a really tricky situation. We were out of term on our current mortgage and our existing broker had exhausted all options to re-mortgage due to the complex nature of our holiday let property (Grade II listed, timber frame construction and above commercial). Working under considerable time pressure due to the financial penalties being imposed by the existing lender, Brian was relentless in his search for a solution that would allow us to refinance a property that was on face value mortgageable. Thankfully, he didn’t give up and nine months later, we completed on the re-finance. We feel so fortunate to have found WTBSN and would like to thank Brian and the team sincerely for going the extra mile. We couldn’t have done it without you!
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