Using home equity to borrow money

Your home, your leverage: making equity work

Home equity is the difference between what your property is worth and what you still owe on your mortgage. Used carefully, it can be a flexible, lower-cost route to funding life’s bigger needs - from consolidating expensive credit to helping family or improving your home. In 2025, the UK market has shown measured resilience. Equity release lending edged up to £639m in Q3 - a touch higher than Q2 - and 4% above the same quarter last year. Plan numbers dipped, yet average loan sizes grew, reflecting cautious borrowers unlocking only what they need as house prices underpin valuations. New lump sum loans averaged around £116,500, with funds often directed towards debt management, family support and budgeting.

Later-life borrowing remains active. In Q2, older homeowners released £636m across new and returning customers, a 10% rise year on year, with new lump sum lifetime mortgages averaging roughly £126,400. Further advances increased sharply as more homeowners used rising property values to top up existing plans. Q1 saw 5,620 new lifetime mortgages totalling £530m, and by Q3 there were nearly 40,000 new later-life loans, including over 6,000 lifetime mortgages - clear evidence that equity is playing a larger role in retirement planning.

More broadly, buyer activity has been stirring. Net approvals for house purchases rose to 65,400 in July, pointing to improved access to credit. New mortgage commitments have also surged year on year to the strongest level since late 2022, with gross advances climbing and high loan-to-value lending ticking up. While this is not the same as equity release, it matters because a healthier mortgage market can improve options for remortgaging and further advances, which are alternative ways to use your equity.

Using home equity is not a one-size decision. Remortgaging can reduce overall interest costs if you lock in a competitive rate. Further advances keep things with your current lender but add borrowing on top. Secured homeowner loans sit alongside your mortgage and can be useful if remortgaging is not practical. Lifetime mortgages are designed for older borrowers, often with no required monthly repayments and interest that rolls up. Each path carries costs, implications for your estate, and responsibilities you should weigh. Kandoo’s role is to simplify that choice with clear comparisons and regulated guidance so you can decide with confidence.

Who benefits most from equity-backed finance

If you are a UK homeowner with meaningful equity and a defined goal - such as clearing higher-rate credit cards, funding renovations, supporting children with deposits, or smoothing cash flow in retirement - equity-based borrowing can be worth considering. Later-life borrowers may value the flexibility of lifetime mortgages that require no monthly repayments, while working-age homeowners might prefer remortgaging or a further advance for structured affordability.

This route can also suit those facing uneven income, where unsecured credit limits fall short or rates are less competitive. That said, because you are borrowing against your home, it is crucial to be comfortable with the long-term implications. Kandoo can help you sense-check affordability, compare products side by side and understand how today’s choice affects tomorrow’s options.

Ways to unlock value from your property

1. Remortgage to raise additional funds against increased equity.

2. Further advance with your current lender for a top-up.

3. Secured homeowner loan alongside your existing mortgage.

4. Lifetime mortgage for over-55s, often with no monthly repayments.

5. Drawdown lifetime mortgage releasing funds in stages.

6. Retirement interest-only mortgage with monthly interest payments.

What it could cost and how it could play out

Do you qualify - and how Kandoo can help

Eligibility depends on the route you choose. For remortgaging or a further advance, lenders will look at your income, outgoings, credit profile, loan-to-value and the property itself. A good credit history and a lower loan-to-value typically unlock better rates. Secured homeowner loans can be more flexible for credit histories that are less than perfect, but the rate will reflect risk. For later-life options, age and property value are central. Lifetime mortgages usually start from age 55, with maximum loan amounts based on age, property value and health or lifestyle factors. Drawdown plans allow you to release an initial amount and keep a reserve, limiting interest roll-up on funds you do not yet need. Consumer protections include no-negative-equity guarantees and mandatory advice for equity release products. Kandoo can help you navigate criteria across multiple lenders, compare total costs and structure borrowing responsibly so it aligns with your plans for retirement, inheritance and day-to-day affordability.

From idea to funds - the practical journey

1. Define purpose and budget - know how much you need.

2. Check your credit file and current mortgage terms.

3. Get an equity estimate using recent local valuations.

4. Compare product types and eligibility with Kandoo.

5. Receive personalised illustrations and total cost breakdowns.

6. Complete application and lender valuation of property.

7. Legal work finalised - review documents carefully.

8. Funds released - set up repayments or drawdowns.

Balancing advantages with the trade-offs

Read this before you proceed

Using home equity is a strategic decision that should be guided by your time horizon and risk tolerance. Consider whether today’s borrowing will still feel comfortable if rates move or your income changes. For later-life products, think about how interest roll-up affects your estate and whether drawdown could better control costs. If you are supporting family, set clear expectations so help today does not compromise your own retirement. Factor in fees, legal work and any early repayment charges that may apply if you switch or repay sooner than planned. Above all, only borrow what you need and plan how you will use the funds before you apply.

What else could you do instead

1. Unsecured personal loan for smaller, shorter-term needs.

2. 0% balance transfer credit card to cut interest temporarily.

3. Budget review and expense reduction to free cash flow.

4. Savings redraw - using existing cash reserves first.

5. Government or local grants for energy or accessibility improvements.

6. Downsizing to release equity without borrowing.

Common questions, clear answers

Q: Is equity release the same as remortgaging? A: No. Equity release - usually a lifetime mortgage - is targeted at over-55s and can have no required monthly repayments. Remortgaging replaces your existing deal and requires monthly payments.

Q: How much could I borrow against my home? A: It depends on loan-to-value, income and credit for standard mortgages, and on age and property value for lifetime mortgages. Older applicants may access higher percentages with lifetime products.

Q: Are rates improving in 2025? A: Market signs are mixed but constructive. Purchase approvals and new mortgage commitments have risen, indicating healthier access. Pricing still varies with lender appetite and your profile.

Q: Will using equity affect my inheritance plans? A: Potentially. With lifetime mortgages, rolled-up interest reduces the equity left. Features like drawdown and optional interest payments can manage that impact.

Q: Can I repay early without penalties? A: It depends on the product. Many fixed-rate mortgages and lifetime mortgages carry early repayment charges. Always check the key facts illustration before you commit.

Q: What are the typical fees? A: Expect valuation, legal and product fees. Some deals are fee-free but may trade cost into the rate. Kandoo will show the real total cost.

Ready to explore with Kandoo

If you want clarity on borrowing against your home, speak to Kandoo. We compare products from a broad panel, explain trade-offs in plain English and help you choose a route that fits your budget, timeline and long-term plans. A short conversation can save years of second-guessing.

Important information

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Equity release is not right for everyone. Seek regulated advice tailored to your circumstances.