Releasing Equity in current property

shammyman

Hi

We are currently trying to sell our property and have seen the property of our dreams. A situation i'm sure many people have found themselves in.
We can afford to pay the current mortgage and a mortgage on the property of our dreams until our current property sells but the deposit is locked into the current property as equity.

My question is how do we unluck the deposit without having to wait for our current home to sell.

A loan is out of the question as we currently have some debt we are repaying and any more would affect our ability to get the new mortgage and mean that we couldn't then afford the 2 mortgages.

I also don't want to remortgage with the view to rent our current property as i would like shot of it!

I imagine i'm asking the unanswerable and will have to watch the house of my dreams disappear but anyones advice would be greatly received.

Cheers

hcb42

I think you know the answer...

You cannot "unlock" it, you need to sell it to do that, so the only option would be some form of loan, but of course then 100% finance is not available either.

All you can do is put the energy into selling yours, and hope you can get a quick sale at a price that makes the whole thing worthwhile.

I was gutted 2 years ago as a property in my village had been on market and fallen through several times, but it eventually went before I could put an offer in. Would have been a perfect project

Thrugelmir

Keep dreaming.

And in the meantime tackle your other debts. If you can afford 2 mortgages and other costs of ownership then should be easy to clear them if you put your minds to it.

Conrad

One can release equity via the existing lender using a further advance for acceptable purposes.

You will need 15% deposit on the new property and the existing property can be ignored by some lenders, thereby making the new mortgage obtainable.

All doable, an EXPERIENCED broker will know exactly what to do.

shammyman

Thanks guys - pretty much as i thought although will look into what you have said conrad.

On a second slightly linked note.

My father in law(As father in laws go a pretty poor one, reason we have debt!!) states when they bought their property 2 years ago he didn't want/have the money to pay the deposit. He states the seller accepted an offer higher than the price he wanted on the proviso that he didn't have to pay the deposit. I.e. £100k house, 10% deposit = £10k. Father in law offers £110k, mortgage company give him 90% mortgage of £99k which is then given to seller and father in law has 100% mortgage.

1. is this legal? surely there is some tax/mortage company checks
2. surely someone somewhere is going to be asking where this £10k has gone?

As with my first question above, i think i already know the answer but the father in law(A*sehole he is) just got me thinking.

Again thanks in advance for everyones time

hcb42

nope, that's not on.

rndb

Glad you asked this question as we are currently ina very similar situation....

I am having a debate with myself of putting in an offer for the asking price and then asking vendor to pay stamp duty + 5% deposit (so in effect I;m not paying the asking price) As far as I am aware the most vendor gifted deposit accepted by mortgage comapanies is 5% (and that then limits lenders to only a couple i.e halifax and I think nationwide) so you will still have to raise 5% deposit. It is legal as long as it is declared - most mortgage companies will let the vendor pay the stamp duty with no issues, its the deposit that then limits lenders

Thrugelmir

shammyman wrote: »

I.e. £100k house, 10% deposit = £10k. Father in law offers £110k, mortgage company give him 90% mortgage of £99k which is then given to seller and father in law has 100% mortgage.

This concept fails as valuer representing the lender would is unlikely to agree to a valuation of the property which is 10% over the advertised asking price for the property !

This practice did occur in more recent years but required collusion between a number of parties in order to defraud the lender.

poppy10_2

shammyman wrote: »

He states the seller accepted an offer higher than the price he wanted on the proviso that he didn't have to pay the deposit. I.e. £100k house, 10% deposit = £10k. Father in law offers £110k, mortgage company give him 90% mortgage of £99k which is then given to seller and father in law has 100% mortgage.

1. is this legal?

No, it's fraud, pure and simple

surely there is some tax/mortage company checks
surely someone somewhere is going to be asking where this £10k has gone?

A few years ago at the height of the mortgage boom, banks like Northern Rock weren't checking, and were happy to turn a blind eye. That's why they went bust and the taxpayer bail them out to the tune of billions. Now the banks do check.