Can I Use My Equity

Soulsurfer_2 · 11 December 2017 at 10:04PM

I have a house in my sole name that I have a £193k mortgage with 10 years to go on a 0.5% above base tracker that I self certified for 15 years ago, I'm cutrremntly paying interest only.

I separated with my wife a couple of years ago and agreed she could continue to live there with my son until the end of the mortgage when we then split the equity. Currently the house is worth around £420k, so £227k equity.

Currently I'm paying £975 pm in rent, is there any way I can borrow against my mortgage to buy another property to get out of the rental market, bearing in mind that on paper I earn very little?

Sarastro · 11 December 2017 at 11:04PM

You mean borrow against your share of the equity (not the mortgage)? Well, unless you've written it down all the equity is yours as far as the bank is concerned. I'm sure there's a vendor out there with a product that might work but you need to be able to demonstrate affordability; i.e. that you can afford the repayments, which will depend on what you earn, blah blah. Having said that you are paying 975 rent so you must be earning something.

Is your wife paying rent to live there? I don't think a mortgage company would take a great view of the fact you are shelling out a mortgage but not living in the house and not charging rent. Alternatively, is your wife paying the mortgage...whole new heap of problems as it's not her mortgage, it's yours.

Soulsurfer_2 · 12 December 2017 at 2:03PM

Thanks for your reply.
Yes I mean borrow against the equity. I pay the existing mortgage and I am reimbursed with nothing written as far as the lender is concerned regarding the equity, but there is a separation agreement where I agree to pay an amount associated with the value house at the end of the existing term, however this isn't directly linked. I must add that any transaction regarding this house would be fully disclosed to my wife.
So could I assume that under these circumstances I would be able to borrow against the full equity?

getmore4less · 12 December 2017 at 2:55PM

bearing in mind that on paper I earn very little

You might need to fix that if you want to start raising money.

if you can't get enough releasing from the current property a second mortgage might be even more difficult.

You probably want to check the status of the income and the CGT liability that may start building.

Sarastro · 15 December 2017 at 9:03PM

I'd probably talk to an independent mortgage adviser first

Thrugelmir · 15 December 2017 at 11:10PM

Soulsurfer wrote: »

I must add that any transaction regarding this house would be fully disclosed to my wife.

Your ex would need to be party to such an arrangement, i.e. jointly and severally liable for the debt. This alone one suspects would make the idea a non starter. Without even considering other issues.

Can I Use My Equity

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free