There are three ways to get at the money tied up in your home, and the most common mistake is treating them as alternatives for the same job. They are not. Remortgaging is how you release equity. A bridging loan is how you solve a timing problem. A lifetime mortgage — which is what "equity release" formally means — is how someone over 55 raises money without monthly payments. Pick the wrong one and it can cost you several times more than it needed to.
This guide sets out what each one actually costs on the same £50,000, when each is the right answer, and how to recognise which situation you are in.
"Equity release" is used loosely to mean any way of getting money out of a property. In UK regulated advice it has a narrower meaning: a lifetime mortgage or home reversion plan for homeowners aged 55 and over, where there are usually no monthly payments and the interest rolls up until the property is sold.
That is a different product from a remortgage or a bridging loan, and it is worth being clear about which you are looking for before you start.
Friends Capital does not advise on equity release or lifetime mortgages. If that turns out to be the right route for you, we refer you to a qualified partner who specialises in it and who advises you directly. Their fee is capped at £1,795 and is payable only on completion. Our equity release page explains how the referral works. We do advise on remortgaging, further advances, second charge loans and bridging finance, which are the other two routes covered here.
You replace your existing mortgage with a larger one, or take a further advance from your current lender, and keep the difference. For the large majority of homeowners wanting to raise money against their property, this is simply the right answer, because it is by a wide margin the cheapest.
What it needs from you: enough equity, provable income the lender will accept, and time — usually four to eight weeks from application to money in the bank. Affordability is assessed on the larger loan and stress-tested at a rate above the one you will pay, so the limit is normally your income rather than your equity. Our borrowing calculator is a reasonable starting point, and the guide to when you can remortgage covers the timing in detail.
The catch nobody mentions: you are usually spreading the new borrowing over the remaining term of your mortgage, which can be decades. The monthly cost looks small precisely because the period is long, and the total interest is correspondingly large. If you are borrowing for something with a short life, consider asking for the additional borrowing on a shorter term, or overpaying it down.
And if you are part-way through a fixed rate, an early repayment charge of 1–5% of the balance may make remortgaging the whole loan a false economy. That is the main situation in which a second charge loan — a separate loan behind your existing mortgage, leaving it untouched — is worth looking at instead.
A bridging loan is short-term borrowing, typically one to twenty-four months, secured on property and repaid from a defined event: a sale, a remortgage, or funds arriving from elsewhere. It can be arranged in days rather than weeks, and lenders look primarily at the security and the exit rather than at your income.
That makes it genuinely useful in a narrow set of situations:
What it is not useful for is raising money you could raise more cheaply with four more weeks of patience. The whole value of bridging is speed, and if you do not need speed you are paying a large premium for nothing.
You must have an exit. This is the single thing that matters most. A bridging loan with no credible way of being repaid is not a solution, it is a deferred crisis, and a responsible lender or broker will not arrange one. If the exit is a sale, what happens if it does not sell? If the exit is a remortgage, have you checked you will qualify for it?
Illustrative figures, not quotations. Rates and fees vary considerably by case and lender, but the orders of magnitude are what to expect.
| Interest at 1% a month, rolled up | £4,684 |
| Lender arrangement fee at 2% | £1,000 |
| Valuation | £500 |
| Legal costs | £1,500 |
| Our fee | £1,995 |
| Total cost of nine months' borrowing | around £9,700 |
That is close to 20% of the amount borrowed, for nine months. Our fee is typically £1,995 on a bridging case, £495 payable on application and the balance on completion, and the balance can usually be added to the loan — the full schedule is on our fees page.
| Additional monthly payment | £324 |
| Interest in the first nine months | £1,782 |
| Total interest over the full 20 years | £27,875 |
| Total repaid | £77,875 |
Compare the two over the same nine months and bridging costs roughly five times as much. That is the premium for speed, and it is the right price to pay when speed is what saves the deal — and a very poor price when it is not.
But look at the twenty-year figure as well. £27,875 of interest on £50,000 borrowed is what a long term does, even at a low rate. If you can take the additional borrowing over ten years instead, or overpay it, do.
With most lifetime mortgages you make no monthly payments at all, and the interest is added to the balance each year. That is the attraction, and it is also the thing to understand properly: compounding over a long retirement is powerful.
| £50,000 at 6.5%, rolled up for 15 years | around £128,600 |
| £50,000 at 6.5%, rolled up for 20 years | around £176,200 |
Nothing is being hidden from you there — that is simply what no payments for twenty years means, and for many people it is an entirely reasonable trade. But it reduces what is left in your estate substantially, and it can affect means-tested benefits such as Pension Credit and Council Tax Reduction. Products from Equity Release Council members carry a no-negative-equity guarantee, so you can never owe more than the property is worth, and many now permit voluntary payments to hold the balance down. This is specialist advice and we refer it out for that reason.
| If this is your situation | Start here |
|---|---|
| I want to raise money and I have time | Remortgage or further advance |
| I am on a good fixed rate with an early repayment charge | Second charge loan |
| I need to complete in weeks, not months | Bridging — with a defined exit |
| I have bought before selling | Bridging |
| The property needs work before a lender will lend on it | Bridging, exiting onto a mortgage |
| I am over 55 and cannot or do not want to make monthly payments | Lifetime mortgage — referred to our partner |
| I am clearing credit cards and loans | Read the debt consolidation guide first |
It matters which side of the line your case falls on, because it determines what protections you have.
Regulated by the FCA: remortgaging your own home, second charge loans on your own home, lifetime mortgages, and bridging loans secured against the home you live in.
Generally not regulated: most bridging loans secured on investment or commercial property, most buy-to-let, and commercial lending. Unregulated does not mean unsafe or improper, but the Financial Ombudsman route and the FCA conduct rules do not apply in the same way.
We will tell you clearly which applies to your case before you commit to anything.
It releases equity in the plain sense, but it is not "equity release" as the term is used in regulated advice, which means a lifetime mortgage or home reversion plan for over-55s. A bridging loan is short-term borrowing with a defined repayment date. The two suit completely different situations.
Considerably more. On an illustrative £50,000 over nine months, bridging might cost around £9,700 all in, against roughly £1,780 of interest on the same amount added to a mortgage at 4.8%. Bridging is priced for speed, so it is worth paying when speed is what makes the transaction possible and poor value when it is not.
Indicative terms are available the same day, and completion in two to three weeks is realistic where the valuation and legal work run smoothly. A straightforward case on a clean title can be faster. A remortgage is typically four to eight weeks.
Possibly, but not by remortgaging, which is assessed on affordability rather than equity alone. If you are over 55, a lifetime mortgage is assessed mainly on age and property value rather than income, which is why it exists. If you are under 55 with limited income, a bridging loan is not a substitute — it still has to be repaid, and the exit has to be real.
Yes, and it should be specific. "I will sell the house" needs a realistic price and timescale; "I will remortgage" needs confidence you will qualify. A bridging loan without a credible exit converts a short-term problem into a much larger one, and we will say so rather than arrange it.
Usually yes, because the new borrowing is normally spread over the remaining mortgage term. £50,000 at 4.8% over twenty years costs about £27,875 in interest. Taking it over a shorter term, or overpaying, reduces that substantially, and asking for it is free.
No. We refer equity release and lifetime mortgages to a qualified partner who specialises in them and who advises you directly. Their fee is capped at £1,795 and payable only on completion, the initial consultation is free, and you will never be asked for an upfront payment. We do advise on remortgaging, further advances, second charge loans and bridging finance.
The difference between the cheapest route and the most expensive route to the same £50,000 can run into five figures, and it is determined almost entirely by which situation you are actually in rather than by shopping for a rate.
Our Sheffield advisers will work out which of these you need, show you the total cost of each rather than only the monthly payment, and refer you on if a lifetime mortgage is the better answer. The initial conversation is free and carries no obligation.
Get in touch to discuss your options, or call 0800 862 0811.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Most bridging loans on investment and commercial property are not regulated by the Financial Conduct Authority. All figures in this guide are illustrative examples, not quotations, and your own costs will depend on your circumstances and the lender.