Releasing equity in your home
The opportunity to use the equity you have built up in your home can be a good idea for homeowners who want to draw on the equity to buy other income producing assets.
You can typically draw out 75% of the available equity in your home. So, if you purchased yoru house for £200,000 and it's now worth £290,000, you should be able to release £67,500. This money is usually tax deductible because it's added to your mortgage loan. Refinancing can sometimes result in a better rate because you can use the opportunity to shop around for better deals. This is something you will need to discuss with your mortgage broker.
Using released equity to buy very high yielding investments is one way that investors grow their portfolio. It makes sense to a lot of people because the interest on a mortgage is low and the process is fairly standard within the industry.
Another possibility to use the equity to your advantage is Home Equity Loans, also called "second mortgage" loans, which are available up to 85% of the appraised value of your home.