What Is Remortgaging?

Remortgaging means switching your current mortgage to a new deal, either with your existing lender or a different one. Many people do this to secure a better interest rate, release additional funds, or move off an expiring fixed-rate deal.

To remortgage successfully, lenders will assess:

• Your income (salary, pension, or other sources)
• Your outgoings
• Your credit history
• Your age and remaining mortgage term
• The value of your home

These checks form part of affordability assessments — tests that measure whether you can meet repayments reliably. Lenders also apply stress testing, which checks if you could still afford the mortgage if interest rates rise in the future.

When remortgaging can work well

• You still have stable, provable income (employment or pension)
• You can comfortably afford monthly repayments
• You want to borrow a specific lump sum (e.g., home improvements)
• You want to switch to a better interest rate
• You want to consolidate other debts into a single repayment mortgage

When remortgaging can be difficult

• Your income has dropped significantly in retirement
• You fail affordability checks due to higher interest rates
• You are older and lenders limit the maximum mortgage term
• You want a cash lump sum but cannot take on monthly repayments

For many people aged 55+, affordability checks are the main barrier, which is where equity release becomes a possible alternative.

What Is Equity Release?

Equity release lets you access some of the money tied up in your home without moving. The most common type is a lifetime mortgage — a long-term loan secured against your home with no required monthly repayments.

Key features of a lifetime mortgage

• Available from age 55
• You keep full ownership of your home
• No mandatory monthly repayments
• Interest is added and compounded each month (interest-on-interest)
• The loan is repaid when the last borrower dies or moves into long-term care
• You can optionally repay some or all interest to reduce the final balance
• Includes a no-negative-equity guarantee (you will never owe more than your home is worth)

When equity release can work well

• You cannot pass affordability checks for a remortgage
• You want no required monthly repayments
• You want to supplement retirement income, renovate your home, or support family
• You plan to stay in your home long term

When equity release may not be suitable

• You want to maximise the inheritance you leave
• You intend to move home soon (your new property must meet lender criteria)
• You rely on means-tested benefits (benefits based on income and savings), which could be affected by receiving a lump sum

Age Partnership's calculator can estimate how much you could release based on your age, property value and any existing mortgage balance.

Remortgaging vs Equity Release: Key Differences

Which Option Is Cheaper?

The simple answer: remortgaging is usually cheaper, but only if you can pass affordability checks and manage the monthly repayments.

Why remortgaging tends to cost less

• Mortgage interest rates are significantly lower than lifetime mortgage rates
• Interest is usually simple (charged only on the loan amount)
• You can spread repayments over a long term (e.g., 15-25 years)
• You retain more equity, helping to preserve inheritance

Example (illustrative):

• A standard mortgage rate might be 4-6%
• A typical lifetime mortgage rate might be 6.2-7.5% (MER — monthly equivalent rate)

Over time, compound interest makes the total cost of a lifetime mortgage higher than a standard mortgage.

When equity release might be cheaper in practice

Equity release may still be the better practical option if:

• You fail affordability checks
• You cannot commit to monthly payments
• You only need a modest amount
• You want to stop repaying debt entirely in retirement

Important caveat

The true "cheapest" option depends on your personal situation.

A specialist adviser at Age Partnership can compare mortgage and equity release options side by side

When Remortgaging Might Be Better

Remortgaging is often the better choice if you still meet lenders' income and affordability requirements and want to keep borrowing costs as low as possible.

Remortgaging may be the better choice if:

• You have reliable employment or pension income
• You want the lowest long-term interest cost
• You can comfortably manage monthly repayments
• You want overpayment or term-flexibility options
• You want to preserve more of your estate to pass on to others

When Equity Release Might Be Better

Equity release can be ideal for homeowners who want financial freedom without taking on monthly repayments.

Equity release is often better if:

• You cannot pass affordability checks
• You want tax-free cash with no repayment pressure
• You prefer a flexible drawdown option
• You have strong property wealth but lower income
• You're planning to stay in your home long-term
• You want fixed-for-life interest rate certainty

Equity release suits homeowners aged 55+ who value flexibility and simplicity over low long-term cost.

Worked Scenarios: Which Option Fits Different Real-Life Situations?

To make the comparison practical, here are clear, relatable examples showing when remortgaging or equity release is more likely to be the suitable choice. These scenarios help readers map their own situation to a real financial pathway.

Scenario A: Homeowner aged 72 with modest pension income

Property value: £350,000
Remaining mortgage: £0
Needs: £30,000 to replace windows and update heating

Remortgage?

Unlikely to be approved.

• Income is too low to meet standard affordability checks
• Lenders may cap maximum mortgage terms at 5-10 years for someone in their 70s, making repayments high
• Age limits may also reduce borrowing options

Equity release?

Highly suitable.

• Borrowing is based mainly on age and property value
• No affordability checks required
• No monthly repayments needed
• Can choose drawdown to reduce interest build-up

Likely outcome: Equity release is the better option.

Scenario B: A couple aged 58, still working, with a remaining mortgage

Property value: £420,000
Current mortgage: £200,000
Needs: £20,000 for home improvements

Remortgage?

Strong candidate.

• Both partners have employment income
• Stable earnings make affordability straightforward
• Can borrow additional funds alongside refinancing the existing loan
• Likely to secure a lower interest rate than equity release

Equity release?

Possible but not ideal.

• Higher interest rates
• Not necessary if the couple can meet remortgage criteria
• Would increase long-term cost significantly

Likely outcome: Remortgaging is the better option.

Scenario C: Single homeowner aged 65 with limited pension income

Property value: £300,000
Remaining mortgage: £15,000 (interest-only mortgage ending soon)
Needs: £40,000 to clear mortgage and help grandchildren with university costs

Remortgage?

Challenging.

• Pension income may not meet affordability rules
• Applicant may struggle to extend the mortgage into later retirement
• Lender could restrict borrowing or shorten the term

Equity release?

A viable solution.

• Can clear the existing mortgage and release additional funds
• No income checks
• No required monthly repayments
• Drawdown can provide ongoing support for grandchildren when needed

Likely outcome: Equity release offers greater flexibility without repayment pressure.

Scenario D: Homeowner aged 70 planning to move in the next 2-3 years

Property value: £500,000
Needs: £25,000 to refurbish before a future sale

Remortgage?

Possible if pension income is strong enough.

Equity release?

May not be ideal.

• Lifetime mortgages are designed for long-term use
• Some properties do not meet lender criteria if the homeowner later wants to port the loan to a new home
• Early repayment charges could apply if the loan is repaid on sale

Likely outcome: Remortgage or downsizing may be better than equity release.

Scenario E: Homeowner aged 60 with excellent income but high monthly expenses

Property value: £375,000
Needs: £50,000 for debt consolidation

Remortgage?

A strong fit.

• Good income lowers the cost of borrowing
• Debt consolidation typically works best with lower-interest products
• Mortgage term flexibility can spread repayments affordably

Equity release?

Much more expensive for debt repayment

• Not designed as a debt-consolidation tool
• Compound interest makes it costly for this purpose

Likely outcome: Remortgage is the cost-effective choice.

Fees and Costs Explained

Remortgage fees

• Valuation fee — cost of assessing your property's value
• Arrangement fee — lender's charge for setting up the loan
• Legal fees
• Broker fees (where applicable)
• Early repayment charges

Equity release fees

• Advice fee (often paid only on completion)
• Valuation fee (sometimes free)
• Legal fees
• Product/arrangement fees
• Compound interest (largest cost over time)
• Early repayment charges

Impact on Inheritance and Benefits

Inheritance

• Remortgage: balance reduces over time, impact often smaller
• Equity release: interest compounds, reducing estate value more significantly

Means-tested benefits

• Remortgage: low impact unless savings exceed thresholds
• Equity release: lump sums or drawdowns may affect benefits such as Pension Credit or Council Tax Support

How to Decide: A Simple Decision Framework

Choose Remortgage if:

• You can afford monthly repayments
• You want the lowest possible borrowing cost
• You want to preserve inheritance

Choose Equity Release if:

• You need cash with no repayments
• You cannot pass affordability or credit checks
• You want a drawdown facility
• You intend to remain in your home

Where else to get independent advice

Before making any decisions, use trusted, impartial sources of guidance.

Free guidance

• MoneyHelper – government-backed financial guidance
• Citizens Advice – support with benefits, debt and financial rights
• Gov.uk – official information on mortgages and later-life finance

These services help you understand your options but cannot recommend specific products.

Specialist, FCA-regulated advice: Age Partnership

Age Partnership is recommended by Which? for the quality of its equity release advice and customer service.

They can help you:

• Compare lenders and product types
• Understand whether a remortgage may be cheaper for you
• Estimate how much tax-free cash you could release
• Check whether benefits may be affected
• Explain costs and risks clearly

As a first step, try their free online equity release calculator to see how much you could release based on your age and property value.

Conclusion

Remortgaging and equity release are both powerful tools for unlocking the value tied up in your home — but they are suited to different situations.

Remortgaging is usually cheaper and best for those with a stable income

Equity release offers flexibility and no monthly repayments, making it a strong option for many in retirement

The right choice depends on income, lifestyle, plans for the future, and how you feel about preserving inheritance for loved ones.

Start with free impartial guidance, then speak to an FCA-regulated adviser such as Age Partnership to compare options and make an informed decision.