Homeowners are cashing in fast on the increased equity in their homes gained by rising property values. On average they borrowed £9,069 more than a year ago according to the Mortgage Search Tracker from Mortgage Advice Bureau. Releasing cash by remortgaging means owners can use the money to clear debts, pay for home improvements or spend on other things such as a wedding, holiday or new car.
Using equity to pay off debts can be risky. For example, with credit card debt there could be a temptation to slip back into old habits and spend on cards that have just been cleared. Increasing the mortgage can be a good option if the money is used for home improvements such as an extension or loft conversion. These improvements can add value to the property and avoid the need to move to a larger house costing more money. It also saves on agent’s fees, stamp duty and other moving costs.
Michael Williams from Hertfordshire recently mortgaged to finance an extension on his 3 bedroom family home.
He says, “My father was recently diagnosed with dementia and needed to come and live with us but we had no room to keep him and couldn’t afford to move. We released £20,000 to help pay for the extension and we now have an extra bedroom with en-suite. As well as knowing he is safe with us, our property value has increased and we have been able to stay living in an area we love.”