Want to remortgage to release equity – what's feasible?

bright_idea

Hi. I need a bit of advice about remortgaging.

We are a married couple, both age 63, with a joint interest-only mortgage with A&L of £14,124 on a South Coast property with a conservative current market value of £250,000. The mortgage redemption date is 28th April 2010 and it will be repaid in full on 11th March from the proceeds of a maturing endowment assurance assigned to A&L.

We want to retire to Scotland in the next 12/24 months using the proceeds from the sale of our current property to fund an outright house purchase. However the logistic difficulties in relocating from the South Coast to the North of Scotland, and differences between the English/Scottish legal systems, make it impracticable to achieve simultaneous sale and purchase. Our preference if possible would be to release some equity from our current property immediately, and use it to buy a small flat or cottage to occupy as a 2nd home in Scotland until we sell the current property. We would probably then sell the 2nd property and use the net proceeds from both sales to buy a new, permanent home.

Our financial situation is that I have been self employed since 1995 but am now semi retired and running the business down, and my current earnings are a mix of occupational pensions plus consultancy fees. My current gross pension income is £13,175 pa. My net pre-tax self employed profits averaged over the last 3 tax years are £7,743. Not sure about proving these to a mortgage lender - I have annual accounts, but they are not independently certified or audited by an accountant. I do not have formal tax assessments for those years either , as I complete my tax returns online. However I do have (downloaded) copies of my online tax returns and of HMRC's online tax calculation page based on those returns. My wife has gross pension income (current annual rate) of £5200.

Would it be feasible to remortgage our current property on an interest-only basis, with no associated savings product (because I would repay it from the proceeds of the sale) and if possible with low, or no, early redemption charge (because I would be redeeming in 2 years max) ? If so, how much would we be likely to be able to borrow ?

We have no HP agreements, and our 4 credit cards are repaid in full each month. We have never had any CJs against us, and have not missed any payments of our existing mortgage. On the debit side, I have unsecured personal loans outstanding of around £15,000 with monthly repayments of £600 which have always been made on time. However I am now in a position to redeem those loans, so if necessary could pay them off before applying for any mortgage deal if the potential lender would otherwise limit the amount advanced because of my high monthly commitment relative to income.

I would really appreciate any advice or help - I have no experience of this, and have no idea of what is or isn't possible in today's market conditions – or how easy/difficult it would be.

Thanks in advance.

S.

getmore4less

Buying/seling an interim pace seems an expensiveway to do this..


Sell up and rent in Scotland while you find your ideal home.


Much easier to house hunt when local.

butterfriends

hi there, my mortgage lender accepted hmrc hard copy statements for each year as proof of income - in other words requested by phone and sent through the post rather printed off online. they took around a week to come through

but i would agree with the post above, try renting up here for awhile till you find somewhere you fall in love with

Conrad

It's all feasible.

Total new mortgage sum to include the existing mortgage balance, would be something like 4 x income of the higher earner to include pensions and self employment, and 1 x the lower earners income.

Debts will reduce the mortgage sum available.

Most lenders have a minimum term of 5 years+.

A case such as this is all about positioning. Try yourself or ask a reputable experienced broker that only does mortgages (not one of the larger online type call centres as they are generically trainied and tend not to have the requisite attention to detail / laterall mindset).

All the best.

bright_idea

getmore4less wrote: »

Buying/seling an interim pace seems an expensiveway to do this..


Sell up and rent in Scotland while you find your ideal home.


Much easier to house hunt when local.

I agree it's easier to house hunt when local - that's exactly why I want to buy a small temporary property now to use as a base for looking for a permanent home! Renting is my Plan B, but would be more difficult as I would want unfurnished which are scarce in the area I am looking in, and I also have 2 large dogs - generally a no-no for most landlords!

S

S

bright_idea

Conrad wrote: »

It's all feasible.

Total new mortgage sum to include the existing mortgage balance, would be something like 4 x income of the higher earner to include pensions and self employment, and 1 x the lower earners income.

Debts will reduce the mortgage sum available.

Most lenders have a minimum term of 5 years+.

All the best.

Well, I'm encouraged!
So on the figures I gave, around £88,000 might be possible? When you say that debt would reduce it, do you mean that the outstanding £15,000 would bring the maximum advance down to £73,000, or would the lender look at the monthly outgo and limit the mortgage to what they would consider "affordable" taking my existing monthly loan repayment into account?

Is the term relevant? Given that I anticipate selling in 12-24 months I would obviously have to be redeeming early whatever the original nominal term, so preferably I would be looking for deals with low early redemption penalties.

S

bright_idea

bright_idea wrote: »

Would it be feasible to remortgage our current property on an interest-only basis, with no associated savings product (because I would repay it from the proceeds of the sale)......... ?

Hmm - sorry to come back again, but can anyone suggest lenders who might be OK with an interest-only mortgage without a savings product of some kind?

As I posted earlier, I would be intending to use the money raised from remortgaging one property to buy a 2nd property - so should I tell potential lenders this when I apply, and say that my proposed method of repaying the mortgage at the end of the term would be to sell one of the properties? (In fact, as I said in my original post, I would be intending to redeem early after only a couple of years, but presumably it wouldn't be a good idea to mention this when applying?!)

S

Conrad

Hello again

Several lenders can do this, but it's all about positioning the application correctly. I'd suggest you try an experienced broker that ONLY does mortgage as you could well make various unforseen errors which could cause a decline.
An example of one such lender I've used is Covernty BS, but don't take this as a recommendation as far more info would be required to give you specific ideas.

All the best