For many homeowners, your property is your biggest financial asset so when it comes to re-financing your home, it can be confusing to know which the best avenue is to go down – equity release or remortgage.
Both options allow you to access the value tied up in your home – but they work in very different ways and are designed for different stages of life. Here is a simple, clear breakdown to help you understand the difference and choose the option that’s right for you.
What is Remortgaging?
Remortgaging is when you switch your existing mortgage to a new deal, either with your current lender or a new one. It’s something many homeowners do every few years to keep costs down or release extra money.
Common Reasons to Remortgage
- To get a better interest rate
- To borrow more for things like home improvements
- To consolidate other debts into one monthly payment
- To change your mortgage type (e.g interest-only to repayment)
How it Works:
The lender will look at your income, credit score, current mortgage balance and the value of your home. If everything stacks up, you move onto the new mortgage deal and may benefit from lower monthly payments or access to extra funds.
Who Remortgaging Suits
Remortgaging is typically best for anyone who is still working, has a stable income and wants either lower monthly payments or extra money at a relatively low interest rate.
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What is Equity Release?
Equity release allows homeowners (aged 55 and over) to unlock some of the cash ties up in their home without having to move. The most common type is a lifetime mortgage.
Key Features of Equity Release
- You usually don’t make monthly repayments.
- Interest is added to the loan and compounds over time.
- The loan is repaid when you pass away or move into long-term care.
- You continue to live in your home.
Some people use equity release for home improvements, helping family members, boosting retirement income or paying off existing debts.
Who Equity Release Suits
It is generally suited to homeowners who are retired or approaching retirement, have limited income for regular mortgage payments, and want a lump sum or flexible access to cash.
Remortgage vs Equity Release: Key Differences
| Feature | Remortgaging | Equity Release |
| Age requirements | Any age (subject to lender) | 55+ |
| Monthly repayments? | Yes | Usually no |
| Interest rates | Standard mortgage costs | Higher, with compound interest |
| Ownership | You keep full ownership | You keep ownership, but value reduces over time |
| How is the loan repaid? | Through monthly payments | When you die or go into long-term care |
| Eligibility | Based on affordability and credit | Based on age, property value and health |
Pros & Cons of Remortgaging
Pros
- Can reduce your monthly payments
- Allows you to borrow extra at competitive rates
- Can switch to a mortgage type that suits your lifestyle
Cons
- Affordability checks apply
- Early repayment charges may apply
- Monthly payments may increase if you borrow more
Pros & Cons of Equity Release
Pros
- No monthly repayments
- Access to a tax-free lump sum
- You still own and live in your home
Cons
- Interest compounds quickly, increasing the amount owed
- Reduces the value of your estate (and inheritance for family)
- Can affect eligibility for means-tested benefits.
Which One is Right for You?
Here’s a simply way to look at it…
Choose remortgaging if:
- You’re still working or have regular income
- You want to reduce your monthly payments
- You want to borrow extra for home improvements
- You want to keep 100% of your home’s value
Choose equity release if:
- You’re 55+
- You don’t want monthly repayments
- Your income is low, making remortgaging difficult
- You need a lump sum without moving home
If you’re unsure, it’s always worth speaking to a mortgage advisor or equity release specialist for personalised advice.
In Summary
Both options have their advantages – it just depends on what stage of life you’re in and what your financial goals look like. Understanding the differences can help you make a confident, informed choice that supports your future plans.
