Can I Raise Capital When Remortgaging?

What Is Capital Raising?

Capital raising means borrowing more than you currently owe on your mortgage when you remortgage. The difference between your old mortgage balance and the new, larger one is released to you as cash. This is only possible if you have sufficient equity — the gap between your home's current value and what you owe.

For example, if you owe £180,000 and take out a new mortgage for £220,000, you'd receive £40,000 in cash (minus any fees). This extra £40,000 is added to your mortgage, so your monthly repayments will be higher than before. The process is handled as part of your standard remortgage — there's no separate application.

How Much Capital Can You Raise?

The amount depends on three things: your property's current value, how much you owe, and how much a lender thinks you can afford to repay. Most lenders allow capital raising up to 85% or 90% LTV, though the best interest rates are available at lower LTV tiers such as 60% or 75%.

Your income and outgoings determine what the lender considers affordable. They'll apply income multiples (typically 4 to 4.5 times your salary) and stress-test your ability to pay if rates rise. If your equity is high but your income is modest, affordability may limit how much you can raise.

The Capital Raising Process

Capital raising is integrated into the standard remortgage process:

• You apply for a new mortgage for a higher amount than your current balance
• The lender values your property and assesses your affordability
• If approved, your new mortgage pays off the old one, and the surplus is released to you
• Funds are typically paid into your solicitor's account at completion and then forwarded to you

The whole process usually takes four to eight weeks from application to completion, similar to a standard remortgage. Working with a broker can speed things up, as they'll know which lenders are most efficient and most likely to approve your application.

Things to Consider

Before raising capital, think about the total cost. Borrowing an extra £30,000 over 25 years at 5% would cost around £22,500 in interest alone. If you can repay the extra borrowing faster through overpayments, you'll save significantly. Also consider whether a personal loan, further advance, or other form of borrowing might be cheaper overall for smaller amounts.

Remember that the extra borrowing is secured against your home. If your circumstances change and you can't meet the higher repayments, your home could be at risk. Only borrow what you genuinely need and can comfortably afford to repay.