Yes, Tom Selleck (Magnum PI) is on TV ad nauseum pushing “reverse mortgage” - “it’s not a trick, it’s not a way to steal your house, it’s just a loan,” which is essentially the same thing as the equity release scheme. For older folks, they mortgage your house and give you the mortgage money, and it’s predicated on life-insurance stats about how many years before you no longer need your home for one reason or another.
Your choices are fairly simple -
Second mortgage is simplest, likely has higher interest rate. If you are in the USA, they (foolishly) allow mortgage interest deduction, sosome of your monthly obligation is tax-deductible.
Remortgage the entire mortgage and pocket the difference. Other than crashing the world economy, what could possibly go wrong with that approach?
HELOC- on top of existing mortgage; this is what we have (although thanks to recent lack of travel opportunities, it’s at zero now.) It can top up at 75% of the value of the house, so in your case the remaining $50,000.
The “Line of Credit” advantage is there is no obligation to pay more than the interest (if even that) each month unless you max this out. If you just want access to cash from time to time (vacation, new boat) and pay it down this is ideal. If you are the sort that maxes out your credit cards and never gets them below that, why give yourself a $50,000 additional burden?
Not sure how mortgage insurance works in the rest of the world. AFAIK (been a while) in Canada its paid up front, and if you have more than 25% equity, is not needed.
Any changes to the mortgage banking on the extra value of the house will of course require an independent market assessment valuation of you new improved house.
Should also point out you may need to do a new assessment and update your insurance. Most homeowners may need to do this regularly depending on how much construction costs in your region have increased since the house was last assessed and particularly if your house has been improved bigly. Also, most banks require insurance coverage that matches mortgage.
But basically, you have a $200,000 house that you owe $100,000 on. (Minus what you’ve paid off so far?) if you want cash to spend, You have to increase the mortgage one way or another and hence your monthly payment obligation will go up.