NO Mortgage - Lookin to Invest

BurntOut

My father-in-law has just paid of his mortgage and is now totally mortgage free.

He was chatting about tryin to make some extra money and was thinkin about the following:

He was thinking of tryin to put down a deposit on a new build (not to rent) but to sell once it had actually been built. At the rate of house prices are going up in our area he should make around 10 grand at least.

My question is how does he go about raising the money for a deposit eg 10-15 grand.

Some mention using his home as collateral - sorry to sound stupid but how would he do this??

All advice greatly appreciated.



ps. wish I was mortgage free LOL

Debt_Free_Chick

BurntOut wrote:

My question is how does he go about raising the money for a deposit eg 10-15 grand.

Some mention using his home as collateral - sorry to sound stupid but how would he do this??

Take out a new mortgage on his existing home, to give him £15,000 cash. Use that as the deposit.

Unfortunately, I think the minimum mortgage for many lenders is £25,000. If that's the case, a secured loan may be the way to go.... but for the amount involved, if he has income, then a straightforward personal loan may also be an option (and probably has a lower interest rate than the secured loan).

Just one observation ..... property prices have risen up until now .... but there is no guarantee that they will rise between the date he buys and the date he sells. They could, of course, fall. And he needs to factor in all the buying & selling costs to work out his real profit.