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Find out instantly how much equity you have in your home with this handy mortgage equity calculator.
Equity is the proportion of your home that you own. For example, if your house is worth £400,000 and you have an outstanding mortgage of £200,000, you will have £200,000 equity in your home.
If you sell your house for £400,000, you would use £200,000 of this to pay off your mortgage and you would have the £200,000 in equity (minus any buying and selling fees payable) to put towards your next property.
There are two ways you can build up equity in your home:
You’ll need to know how much equity you have in your home if you want to get a mortgage. When you start shopping around for a mortgage, you’ll need to know your ‘Loan to Value’ – this is the percentage of your home’s value that’s borrowed. In the above example, if you have a £200,000 mortgage on a £400,000 house, you’re borrowing 50% of the value of the home. This means your LTV is 50%.
The lower your LTV, the better the mortgage rates you may get access to. The best mortgage rates are usually reserved for those with an LTV of 60% or lower.
If you’re remortgaging and the amount of equity in your home has increased by enough to push you into a lower LTV band, you may get access to better rates. For example, if you’ve built up enough equity to move from a 75% LTV mortgage to a 60% LTV mortgage, the rates will typically be lower. But be aware, the rates on 60% LTV deals may be better compared to 75% LTV mortgages available today, not necessarily better than the deal you’re coming off.
Remortgaging to release equity involves taking out a bigger loan against your property in order to free up some of the cash you’ve built up in it. There are lots of reasons why people remortgage to release equity including funding a home improvement project, paying for measures to improve your home’s energy efficiency, to fund a deposit for a Buy to Let or helping your child buy a house.
But when you remortgage to release equity you’ll be increasing the amount you owe, so you should consider it carefully. Speak to fee-free mortgage brokers at L&C for advice on whether remortgaging to release equity is the right option for you.
The best mortgage rate for you will depend on your deposit size/ amount of equity in your house, the type of mortgage you want and the length of the deal you take out.
Lenders change their mortgage rates quite frequently, so let expert, fee-free brokers L&C to do the hard work for you. Plus they’ll also factor in any mortgage fees different deals charge to make sure you get the best deal overall.
If you want to get an idea of the best rates available today, see our review of this month’s best mortgage rates.
Award-winning mortgage brokers L&C offer FREE mortgage advice. L&C’s expert advisers will run through your mortgage options and make sure you’re getting the best deal possible. No hidden costs, just great service. You can start your mortgage online to see the deals you qualify for and how much you can borrow or speak to an expert adviser at L&C now on 0800 073 2326.
If you’re buying a house, you should apply for a Mortgage in Principle before you start house hunting. Then once your offer is accepted, go back to your mortgage broker to start your full mortgage application.
If you’re remortgaging, you should start shopping around for the best mortgage deal up to 6 months in advance – and you should certainly do it by 3 months before your current deal ends. You can apply for a mortgage and lock in a rate then keep it under review with L&C’s Rate Check service to make sure you don’t miss out on a better mortgage rate before you need to switch.
Get in touch online or on the phone today to kick things off.
Mortgage brokers – like the experts at L&C – can scour the market for you, looking for the right deal to suit your situation. They can help you save money on your current mortgage and make sure you’re not paying over the odds with your current deal. You can use a mortgage broker to help with a remortgage even if you plan to stay with your existing lender. They are also particularly helpful if you are self employed, buying a Buy to Let or think your situation is unusual in any way. They will know the lenders and deals that will work for you.
You can start your mortgage or remortgage online to see the deals available to you or speak to an expert adviser at L&C now on 0800 073 2326. They are open 9-8 Mon-Thurs, 9-5.30 Fri, 9-5 Sat, 10-4 Sun.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice. Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. If you complete on a mortgage through L&C, L&C will be paid a commission by the chosen lender. L&C will share a percentage of this commission with HomeOwners Alliance, the referring third party. The commission L&C receives doesn’t affect the product or rate recommended to you.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage. Representative example: A mortgage of £225,134 payable over 24 years, initially on a fixed rate until 30/09/26 at 4.88% and then on a variable rate of 6.99% for the remaining 22 years would require 26 payments of £1328.29 followed by 262 payments of £1,593.54. The total amount payable would be £453,042 made up of the loan amount plus interest (£226,909) and fees (£999). The overall cost for comparison is 6.8% APRC representative.
