Minimum Equity to Remortgage in the UK – Simple Guide & Tips

Thinking about swapping your current mortgage for a better deal? Before you start shopping, you’ll need to know how much equity you must have. Most lenders won’t let you borrow more than a certain percentage of your home’s value, so understanding the numbers is key.

Equity is simply the part of your house you actually own. It’s the market value of the property minus any outstanding mortgage balances. If your home is worth £250,000 and you still owe £150,000, you’ve got £100,000 in equity – that’s a 40% equity stake.

How Lenders Measure Equity

Lenders use the loan‑to‑value (LTV) ratio to decide how much they’ll lend. The LTV is the loan amount divided by the property’s current market value. Most UK lenders set a maximum LTV of 75% for a remortgage, which means you need at least 25% equity.

Some high‑street banks are stricter and cap the LTV at 70%, requiring 30% equity. Specialist lenders or buy‑to‑let mortgages might go as high as 80% LTV, but they usually charge higher rates. Always check the specific LTV rules of the lender you’re eyeing.

Ways to Meet the Minimum Equity Requirement

If you’re below the threshold, don’t panic. You can boost your equity by paying down the existing mortgage faster, or by making a one‑off lump‑sum payment if your current lender allows it.

Another option is to improve your property’s market value. Simple upgrades – like fresh paint, a new kitchen, or landscaping – can add several thousand pounds to the appraisal, lowering the LTV without changing the loan amount.

Sometimes moving to a lower‑rate lender helps. A cheaper interest rate reduces monthly repayments, letting you allocate more cash toward the principal, which builds equity faster.

If you own other assets, some lenders will consider them when calculating borrowing power, especially for higher‑value homes. However, they rarely count toward the basic equity requirement; they just affect affordability tests.

Remember to factor in valuation fees. Lenders will order a professional valuation to confirm the property’s current worth. The fee is usually around £150‑£300, and it’s a cost you’ll need to cover before the remortgage can proceed.

Finally, keep your credit score healthy. A strong score can give you access to lenders who are willing to accept a slightly higher LTV, meaning you could get away with a bit less equity.

Bottom line: aim for at least 25% equity to stay in the safe zone, but know that 30% or more gives you more options and better rates. Check your home’s current value, calculate your LTV, and use the tips above to hit the required equity level before you apply.