Today I’m looking at that ever-popular British pastime equity withdrawal and give you some remortgaging advice and information. We Brits are increasingly being lectured about our addiction to credit, and borrowing against the house is cited as one of the worst examples. I look at how it can work – if you’re careful and disciplined.

For years, Gordon Brown trumpeted his success in growing the UK economy and making us all rich in the process. But it now becomes unpleasantly clear that a decade of unfettered growth was based in large part on the never-never.

Not only were we all becoming addicted to cheap and easy credit, but many of us were releasing equity from our homes to pay for that new car or holiday. Of course we always KNEW this – but nobody seemed to care too much with low interest rates and plenty of available credit.

Interest rates are now lower than ever, but the credit crunch means there is no money there to borrow. Meanwhile, Brits are filing for bankruptcy in greater numbers than ever before. Inevitable really – as once you start indebting yourself simply to live, there is only one way you’re going.

Okay, that’s the gloomy stuff, and it IS hard to imagine our more prudent parents and grandparents remortgaging their homes – for that is all you are doing with equity release – to pay for a few more trinkets and geegaws.

But that doesn’t mean equity release is a totally bad thing. In purely financial terms, you’re unlikely to find a cheaper way to borrow money. Get an advance on your mortgage at your regular 5.5%, or take out a personal loan at 8% – there’s no contest.

There’s a reason it’s cheap of course. This is a secured loan, secured against your home in fact. Default on it, and it could be very costly indeed, as you lose your property.

It’s also very easy to lose sight of how much the loan is really costing you, as you can put it on the mortgage to be repaid over the next 20 years.

Say I release £5000 at 5.5%, and pay it back over two decades. I can live with my monthly repayment of £45. More of a shocker is that over the term of the mortgage that £5000 has cost me £8366 on a repayment mortgage. Stick it on an interest only mortgage and it’s much worse. The £5000 has turned into £10,500.

It’s still cheaper than a personal loan over 20 years of course. But it’s pretty horrific if you used the cash to buy a car. Ten years on, your shiny new motor is landfill and you’re still paying for it.

It’s rather different though if you release £5000 to add a bedroom or a bathroom to your home. Potentially, this will add far more to the value of your home over time than a mere £10,500. IT may also mean you can save money by staying put, rather than having the expense of moving to a bigger house.

As ever, you have to weigh the cost against the potential gain. Is this borrowing an investment, such as the home improvement? In other words will it ultimately make you richer? Or is it an expense, like the car, and will it ultimately diminish your wealth?

Consider too, that though we are starting to fear negative equity again, some people have paid off their mortgage. They may be cash poor but property reach.

These people are suffering from too much POSITIVE equity and want a way to release it. There is little point dying with a £1m house to your name.

While there were some awful equity release schemes in the eighties, which basically skinned old people for their property – things are much more tightly regulated now. Safe Home Income Plans (or SHIP) is a trade body set up to ensure good practice.

The big problem any of us is going to have is the current shortage of money, the ubiquitous CREDIT SQUEEZE. It simply isn’t as easy to find credit as it was. But if you already have a mortgage with a bank – they know you and they know your history – it SHOULD be easier to get additional finance. Easier to release more equity than go to a new lender in other words.

My main remortgaging advice is to check how much the extension to your mortgage is costing you. Don’t assume it will be at the same good rate you got before. And check ALL the admin costs. Also remember – borrowing against the house means it’s that much longer until the mortgage is paid off … and that matters to a lot of people. That said – for the prudent, equity release is a good option.

Don’t be in such a hurry to drive to your holiday destination in Europe. Toll motorways in France and Italy may seem a cheap-ish way to beat the crowds, but those €2 and €5 tolls soon mount up.

Who wants to spend their whole journey looking at motorway verges anyway. Go back to the minor roads and you’ll see more scenery as well as saving money.

And make sure you refuel the car when you visit the supermarket – supermarket filling stations tend to be significantly cheaper than independents.

You may ask should i buy car rental insurance? Don’t buy the rental company’s insurance. Get hire car insurance stuck onto your own car insurance policy.

The more you travel the cheaper this gets of course, but even if you only use it once, this is guaranteed to save you money.

If you are hiring a car when you holiday in Europe, request that it be a diesel.

They have better fuel economy than petrol cars and diesel tends to be a lot cheaper than petrol too. This is lost on British drivers as we have the highest diesel pump prices in Europe. But in France, diesel tends to be around 15% cheaper than petrol.

And Make sure you fill the car up with petrol before you return it. Otherwise you’ll be buying the car hire company’s obscenely overpriced fuel.

Any expats looking at raising a mortgage for their property in Spain could do worse than looking at a mortgage from LaCaixa. This financial giant is the biggest bank in Catalonia, and the third biggest in Spain. La Caixa impresses us in that it offers online banking in a host of languages, via its Linea Aberta service, particularly good for UK and US expatriates … as you don’t want to be discussing your financial affairs in a foreign tongue. La Caixa mortgages are available in Spain and abroad. Interestingly, as well as offering savings and mortgages, La Caixa is steward to some of Spain’s largest charitable institutions too.

We are, of course, particularly interested in saving money at Walletwatcher, but if you can save the environment at the same time … all the better. The Mayor of London and British Gas have got together to offer a particularly good deal on home insulation kits, claiming ‘the cheapest DIY home insulation available in the UK’. Savings, needless to say, continue for years after. For those outside London, there are lots of local authority schemes. Check out The Energy Savings Trust.

‘Churning’ your credit card debt, from one free card to another, has been a popular tactic in recent years – and one I’ve enthusiastically promoted. The strategy is simple – get a credit card with an interest-free period; put all your purchases on it; run it until the interest-free period expires; then transfer it to another free credit card.

Great, except with the credit crunch, lenders have been charging a transfer fee … and if you’re paying 3 or 4% to transfer the balance over, you have to weigh up if it’s worth it. If the interest you’re paying is still less than the interest you’d receive by sticking the money in a savings account then good. But if you’re paying 3% to transfer, then leaving the money you WOULD have used to pay off the card on deposit at 2%, then you’re losing out. And it’s getting harder and harder to make the maths work.

The death knell may have been sounded for free deals anyway. Website The Motley Fool did a survey in early March 2008 that found there were just nine cards offering long-term interest free deals, compared to more than 200 a year earlier. If the lenders can’t themselves borrow enough money to lend out – then they’re hardly going to be giving it away free to us. So if you are looking for credit card deals or transfers just now, look at the total cost of borrowing – it may be cheaper simpler to buy on your debit card.