What's the best way to release equity when remortgaging?

Sandwich

We're FTBs with a decent amount of savings. We're planning of putting all our savings into our house deposit to get the best rate, but we would like to release some equity at the end of our initial mortgage term in 5 years time so that we can fund a major extension and hopefully increase the value of the property. What's the best way of doing that? Is it possible to release equity via the remortgaging process, or would you have to do it via a standard personal loan secured against your property? 

To give you a better idea of the situation. We'd be putting down a deposit of roughly £50,000 on a house worth £270,000. In 5 years we'd be remortgaging and would like to release probably £35,000 in equity (so we'd be leaving in the remaining £15,000 and however much of the capital we pay off over those 5 years). What's the best way of doing that? 

tacpot12

I'm sorry that I have no expertise in this area, but as no one else has replied, I wanted to suggest looking at Offset Mortgages in case this helps. 

If I have understood them correctly, you could put down £15,000 deposit (5.5% of £270,000) and put £35,000 of "savings" into the Offset Mortgage to reduce the payments for the first five years, after which you could draw out the £35,000 of "savings" to use for the  extension.  (Don't forget that the cost of building is likely to rise over the next five years).

I don't know of a way to release the extra equity you have in the house due to its value having risen without selling it. 

Slithery

tacpot12 said:

I don't know of a way to release the extra equity you have in the house due to its value having risen without selling it. 

You can do it with any standard remortgage.

AdrianC

You buy a £270k property with £50k equity, £220k mortgage.
In five years, let's say you've paid the mortgage down to £185k.
You want to release £35k equity. So you get a £220k mortgage...

£220k against £270k is just over 80% LtV.
If we guess at a value of £300k in five years, then £220k borrowed would be 75% LtV.

An offset mortgage may indeed be a good plan, but if you have a five year fix now, you'll want to remortgage then anyway.