Personal Finance

Free Up Money in Your House

Re-mortgage to release equity

When you buy a house, you get a mortgage for the amount of money that you need to buy the house. That is the way it works, but if you bought the house 20 years ago, then the house will be worth a lot more than when you sold it.

Therefore, you will get a new mortgage on the amount of money that the house is worth now. You pay off the old mortgage and then you have the difference left over for you to do what you want with.

Now, you will have to pay the money back on the new mortgage, but it is just a way of having the money now. Yes, you will have to pay the mortgage payments for a bit longer, but you have a lump sum in your pocket now.

You will have to think long and hard if this is something that you want to do because you will have to pay interest on the mortgage that you arrange to free up the equity.


If you have decided that you want to get a new mortgage, to access the equity, then you should be careful which mortgage you chose. You should look to keep the payments the same, so that you will still be able to afford the repayments.

If you end up with more expensive payments and you haven’t used a mortgage calculator to make sure that you can afford it, you might end up missing payments and if the worst comes to the worst, then you could end up losing the house and you will have nothing.

Interest Rates

When choosing a new mortgage to get access to the equity, you have to choose the mortgage wisely, based on the interest rates. For example, if you have $50,000 worth of equity in the house, so you re-mortgage the house, so that you can use the money for something else, but you have to pay $60,000 in interest, then you won’t have made a wise decision.

You would have leant more than you needed and you wouldn’t have made a single penny for yourself. You will have made the bank $10,000 though. Therefore, you have to make sure that the re-mortgage is worth it for you in the long run.