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Newbie question - unlocking equity?

PartyRichter
PartyRichter Posts: 5 Forumite
in Mortgages & endowments
Hello all,

I was hoping to outline my scenario in the hope somebody might be able to point me in the right direction!

I bought a small 1-bed flat in Richmond, Surrey almost 4 years ago. The original price was £160k. I paid an £85k deposit - for which I am paying back a benefactor at a fixed rate of £300pcm. So to cover the rest, I got a 25 year repayment mortgage for £75k which I am paying off at £445pcm.

Apparently, my property is now worth around £210k - £220k, so I am hoping to somehow take advantage of this equity to release some funds for me to either go travelling or go back to college.

I called my mortgage provider to get some loan quotes, but but it seemed that regardless of how I extended the terms of the mortgage, the hike in monthly repayments was still way more than I could afford.

Am I doing something wrong? Is there a better approach that I haven't thought of? Any help or advice would be very much appreciated!

Regards,

PartyRichter:D

Comments

  • ~Beanie~
    ~Beanie~ Posts: 3,043 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    No you are not doing anything wrong.

    If you borrow more money against the value of your house then your repayments will go up, if you can't afford the repayments then you can't afford to take the extra borrowing.

    How were you planning on paying your mortgage / benefactor if you went off travelling or back to College?
    :p
  • PartyRichter
    PartyRichter Posts: 5 Forumite
    Hi Beanie, thanks for the reply,

    I was hoping to sub-let while I was away (I believe it's worth between £900 to £1000pcm).
  • neverdespairgirl
    neverdespairgirl Posts: 16,501 Forumite
    Don't forget that "releasing equity" is a nice way of saying "taking on more debt"!
    ...much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.
  • Ian_Griffiths_Halifax
    Ian_Griffiths_Halifax Posts: 1,690 Forumite
    Don't forget that while you are away your tenant might do a runner leaving you with higher mortgage payments and no rent coming in.
    I am a Mortgage Consultant and don't like to be told what I can and can't put in a signature so long as it's legal and truthful.
  • PartyRichter
    PartyRichter Posts: 5 Forumite
    Sod it. Sounds like I might as well sell up and move on.

    Thanks for all your replies.

    PartyRichter
  • andrewmp
    andrewmp Posts: 1,798 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    PartyRichter wrote: »
    Sod it. Sounds like I might as well sell up and move on.

    Thanks for all your replies.

    PartyRichter

    Yeah, hopefully you'll get your £160k back anyway.
This discussion has been closed.
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