Can I remortgage my house to buy another property?

Yes. Many homeowners remortgage their home to release equity and use the money as a deposit, or the full price, for another property, such as a buy-to-let, a holiday home or a home for a family member. The lender increases the mortgage on the current home, and the extra is paid out when the remortgage completes.

The second property then usually needs its own mortgage, such as a buy-to-let mortgage, unless the equity released covers the whole price. Lenders on both properties need to know where the deposit came from, so the plan should be clear from the start.

The lender on the current home checks that the larger mortgage is affordable on the household's income and outgoings, and it values the home to work out the loan-to-value. Most lenders ask what the money is for, and some limit how much can be raised for buying another property, or ask about the plans for it.

If the other property is a buy-to-let, the lender may look at whether the rent covers that mortgage, because a shortfall would put pressure on the household budget. If it is a second home, the payments on both mortgages need to fit the income.

Buy-to-let lenders usually ask for a larger deposit than residential lenders, and they accept deposits raised by releasing equity from the borrower's home. The buy-to-let mortgage is assessed mainly on the expected rent, tested against the interest at a stressed rate, along with the borrower's income and experience.

Some landlords buy through a limited company, which changes how the deposit is lent into the company and how the rent is assessed. How buy-to-let lending works is set out in the buy-to-let mortgages guide.

Buying an additional residential property usually brings stamp duty at the higher rates for additional dwellings in England and Northern Ireland, and similar higher rates under Land Transaction Tax in Wales and the Additional Dwelling Supplement in Scotland. The higher rates can add a large amount to the cost of the purchase.

Rental income is taxable, and selling a property that is not the main home can bring capital gains tax. Tax rules change, so an accountant can explain how they apply to a particular plan.

Home improvements are another common reason to release equity. Lenders usually accept improvements as a reason for borrowing, and they may ask for a schedule of works or quotes for larger projects. Works that need planning permission or building regulations sign-off should have them in place, because they can affect the value later on.

Extensions, loft conversions and new kitchens may add value to the home, but not always as much as they cost. A further advance from the current lender, or a second charge mortgage, can sometimes fund improvements without replacing the whole mortgage.

Releasing equity increases the debt secured on the home, so the home is at risk if payments are not kept up. Owning two properties also means two sets of costs, from mortgage payments to maintenance, insurance and, for a buy-to-let, periods without a tenant. Interest rates can rise when deals end, raising the cost of both mortgages.

The costs of the remortgage itself include any early repayment charge and the new lender's fees. How lenders work out the amount that can be released is explained on the remortgage to release equity page.