Understanding how releasing equity works in a mortgage can make a real difference when it comes to managing your finances, particularly later in life.

Equity represents the portion of your home that you truly own, and over time, it can become one of your most valuable financial assets.

Knowing how to calculate, grow, and use your equity will help you make informed choices, whether you are thinking about remortgaging, moving home, or releasing funds from your property.

How Do You Work Out Your Equity?

To calculate the equity you hold in your home, you take the current market value of your property and subtract the remaining balance on your mortgage.

For example, if your home in Durham is worth £220,000 and you still owe £120,000 on your mortgage, your equity would be £100,000.

This figure will change over time as you repay your mortgage and as property values in the local market rise or fall.

How does equity grow over time?

Each time you make a mortgage payment, a portion of it goes towards reducing your outstanding mortgage balance.

As this balance decreases, your share of the property, your equity, increases.

If house prices rise in Durham, this will further boost the value of your equity.

On the other hand, if property prices fall or if you borrow more against your home, your equity may be reduced.

Keeping track of your equity position is important if you are considering future borrowing or making financial retirement plans.

Why Equity Matters In Later Life

Many homeowners in Durham view the equity in their property as an important part of their financial planning for retirement.

Whether you are thinking about improving your home, helping family members, or simply adding flexibility to your finances later in life, releasing some of this value can be a practical option.

Holding more equity can also give you access to better mortgage deals if you are looking to remortgage, or greater freedom if you are considering downsizing.

What can you do with your equity?

If you are still working and have a strong credit profile, you may be able to remortgage to release some of your equity.

This is often used to fund home improvements, repay debts, or cover other significant costs.

Another option is a further advance, which is an additional loan from your current lender, secured against your home.

This allows you to raise extra funds while keeping your main mortgage in place.

For homeowners aged 55 or over, equity release is another route to consider.

The most popular option is a lifetime mortgage, which allows you to access tax-free cash from your property without the need to move or make regular repayments.

The loan is typically repaid once the property is sold.

Date Last Edited: June 13, 2025