Releasing Capital

lizz_2

I want to release some capital in my house to buy a buy to let house (my pension appears to be null and void so I need to do something in place of it!). I have no idea where to start. I have approached some banks etc. but feel bombarded with patter and do not really understand any of it.

Anyone know where to start?

Regards

Lizz

Ian_W

Good place is the mortgage section of this site and particularly Martin's remortgage guide which you can access HERE.

All you're doing is remortgaging your existing property to release the equity so you buy a property to rent out. You would probably be best to use a broker, "whole of market" and "fees free" are the phrases to remember, if you can get a recommendation from family or friends that's best otherwise use the links on the site to find one.

One thing which isn't how to, but more whether to, is have you researched the rental market around where you live to see what returns are likely to be on your investment. I know where I live rents wouldn't cover the mortgage since house prices shot up a couple of years ago. IMO you need to cover your mortgage +30/50% on top to make it a worthwhile investment as you'll have to cover things like insurance, maintenance, agents fees and empty periods on top of the mortgage payments. Sure property prices will go up long term, they always have but it could be a very expensive way of providing a pension.

Since the stock market has grown rapidly over the past 3 years a bigger priority should be to find out why your pension hasn't been performing well and set about changing it, so it does.

lizz_2

Thanks for that. It is a minefield!

Liz

Pal

It is worth noting that there is no such thing as "releasing capital" on a property unless you are selling it. You are borrowing, using a mortgage secured against your home, and as a result you could then lose you home if the BTL or your other finances go belly up.

IMHO anyone who comes onto a website basically saying "I want to do a BTL but don't know how - HELP!" should not even think of doing one. BTLs can be difficult investments that should be treated like running your own business. Do your research and read a lot of books before you jump in.