Remortgaging To Raise Extra Cash | What You Need To Know UK

Introduction

Hi, welcome back to our channel and podcast! My name is Gemma, and here at WIS we talk about money, mortgages, and positive money mindset.

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On today’s episode of Let’s Talk Money and Mortgages, we have Ifthikar joining us. For those who are new to the channel, Ifthikar is a trained accountant and mortgage advisor with over 11 years of experience, and one of the founding directors at WIS.

Today’s topic: remortgaging to raise extra cash.

Q1: What does it mean to remortgage to raise extra capital?

Ifthikar:

Mortgages usually have a fixed deal period (e.g., 2, 3, or 5 years) within a 25-year mortgage.

At the end of a deal, you can remortgage, which means moving to a new rate.

During remortgaging, you can sometimes borrow extra money, using your home’s equity.

Example: With 25% equity, you might withdraw an additional 10% of your property value—this is capital raising.

Q2: Can you remortgage if you’re on a standard variable rate (SVR)?

Ifthikar:

Yes, this is called a further advance.

You stay with the same bank but request extra funds.

Alternatively, you can switch banks, but penalties may apply for breaking your deal early.

Q3: Should you raise as much capital as possible?

Ifthikar:

Generally, we discourage borrowing more than necessary.

Good reasons to raise capital:

• Home improvements (extensions, new kitchens)
• Consolidating expensive unsecured debt (e.g., loans with 12–15% interest vs. 1–1.5% mortgage rate)

Always discuss with an advisor because:

• Your mortgage payments will increase
• You may need to extend the mortgage term

Q4: How do lenders determine how much you can borrow?

Ifthikar:

Lenders use an affordability calculator, which considers:

• Income
• Debts and financial commitments
• Number of dependents
• Property value

Each bank calculates differently; some may allow up to 85% of the property value.

Advisors can help estimate the amount you’re likely to be approved for.

Q5: What if you disagree with the bank’s property valuation?

Ifthikar:

You can appeal the valuation if you think the property is worth more.

Success rates are low, as valuers are professionals.

Alternative: apply with another lender to get a different valuation.

Q6: What documents are needed to raise extra capital?

Ifthikar:

Banks need to know how the money will be used.

Acceptable uses:

• Home improvements or extensions (with quotes/plans from architects)
• Paying off unsecured debt

Documentation may include quotes, invoices, or plans.

Proof may not always be requested, but it’s likely if borrowing a large amount.

Q7: Is it a good idea to raise capital to pay off loans?

Ifthikar:

Depends on your situation.

If you have high-interest debt, it may make sense.

Requires a detailed assessment with an advisor to ensure you’re not creating more debt.

Q8: Can you remortgage mid-fixed deal to raise extra capital?

Ifthikar:

Yes, but this is usually a further advance.

Switching to another bank mid-deal may incur early repayment charges.

Ideally, raise extra capital when you remortgage at the end of your deal.

Q9: Are further advance rates the same as remortgage rates?

Ifthikar:

Rates vary by bank.

Further advances are smaller amounts on top of your existing mortgage.

Some banks charge slightly higher rates, while others offer the same rates as a standard remortgage.

Q10: Final advice for raising extra capital

Ifthikar:

Be careful—raising extra capital increases your mortgage and monthly payments.

Always have a clear reason for raising funds.

Speak with an advisor before proceeding, as banks are stricter with capital-raising applications.

Closing

Gemma:

These points may not apply to everyone; always consult an advisor for personal guidance.

Our contact details are below—feel free to reach out for questions.

Reminder: A mortgage is secured against your home or property and may be repossessed if repayments are not maintained.

Thank you for joining us! We’ll be back next week with another episode of Let’s Talk Money and Mortgages.

Have a great day, stay safe, and see you soon!