Mortgage Guides

Equity release

What is equity release and home equity?

Home equity (sometimes referred to as mortgage equity or house equity) is the value of your home minus any remaining capital you owe on your mortgage. Put simply, equity is the amount of your home you own.

Equity release is the name given to a number of products that allow you to access the home equity you have built up as cash. This is just one way to use home equity to release cash and you should consider all your options. NatWest doesn't currently offer equity release products.

How does equity release work?

Releasing equity means taking some of the equity you have built up in a property and turning it back into money. Your percentage of equity reduces but you have access to liquid funds in return. There are two main types of equity release products available that can help you release equity tied up in a property. There are costs and interest usually associated with these types of products.

Information Message

NatWest does not currently offer 'equity release mortgages', 'lifetime mortgages' or 'home reversion' products. This information is for guidance only.

Lifetime mortgages

A lifetime mortgage (or equity release mortgage) is a long-term loan secured against your home. It's normally repaid when you move into long-term care or upon death.

Information Message

Home reversion

This is where you sell part of or all your property to a home reversion provider. When you move into long-term care or upon death, the property is sold, with proceeds divided accordingly to the proportions of ownership.

Information Message

Can I remortgage to release equity?

Yes, it may be possible to release equity from a property when you remortgage. Remortgaging is taking out a new mortgage on the same property. This can be done with your current lender or a new lender.

It involves staying in your current home with a new mortgage based on the equity you have built up. You can find out more information on our remortgage webpage.

What can I use equity release for?

You may want to release money from your property to pay for home improvements, or to use the money to supplement your pension.

NatWest do not offer equity release products but you might be able to achieve your goals with remortgage or additional borrowing.

Like all financial decisions, releasing money from your home is something that needs careful thought.

How much equity do I have in my home?

To calculate how much equity is in your home you can use our home equity calculator.

Here's an example;

  • Your home is valued at £200,000.
  • You paid a £30,000 mortgage deposit and have since repaid £50,000 of the capital you borrowed.
  • Your outstanding mortgage balance is £120,000.
  • The £80,000 paid off the £200,000 value of the property gives you 40% equity.
  • Once you have paid off your mortgage, you will have 100% equity.

What is negative equity?

Negative equity is a scenario where the remaining capital you owe on your mortgage is more than your property is worth. It is often caused by your property reducing in value, compared to the value of the property when you bought it.

An example could be:

  • You have an outstanding mortgage balance of £250,000 on your home.
  • Your home was valued at £275,000 when you bought it but is now worth £240,000 after a fall in house prices.
  • You are in negative equity of £10,000 (-4.2% equity).

Homebuyers with smaller mortgage deposits are more at risk of negative equity. For example, a 5% deposit mortgage means you only have 5% equity in your property when you complete the purchase. Therefore, a 5% fall in house prices would be enough to cause negative equity.

What is the Help to Buy: Equity Loan scheme?

The Help to Buy: Equity Loan scheme is a government incentive designed to help first time buyers purchasing property in England.

You can learn more about Help to Buy: Equity Loan on our Help to Buy and home ownership schemes web page.