15th May 2015
Homeowners are hoping to cash in £9,000 of equity on their homes when they remortgage.
Research by broker Mortgage Advice Bureau shows owners are keen to tap into the value of their homes.
The typical customers looking to remortgage in Q1 had a home worth £248,191, up from £230,000 in Q1 2014, giving people an extra £18,091 of property equity.
Over the same period, the average remortgage loan has rise from £119,854 to £129,023 and the average loan-to-value remortgage remained consistent at 52%.
These figures suggest that rather than leave the extra £18,091 of equity in their home and letting the price rises reduce the value of their borrowing, homeowners are cashing in their equity by borrowing £9,069 more than a year ago.
As well as applying for larger loans, customers are also looking to stretch their repayments over longer terms. A total of 76% of remortgagers searched for 25 year loans in Q1 2014, this increased to 86% in Q1 2015.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: ‘Releasing cash is often a major incentive for people to consider remortgaging, whether to consolidate other debts, pay for home improvements or finance other spending.
‘The fact that many people’s properties have gained in value over the last year offers some the chance to take the same percentage loan that they would have done if they remortgaged 12 months ago and given themselves a significant cash boost.’
He added that another benefit of rising house pries are that fewer people will be in negative equity and more people will be in a position to remortgage.
‘Those who are not motivated to release cash can still make big gains by cutting their rates by taking their pick of the attractive deals on offer,’ he said.