How to release equity at renewal?

looneyboy

Hi..

I currently have a First Direct Offset mortgage that is due to renew in the next few months.. Currently have a mortgage limit of £100K on a property worth circa £350K.

Our personal circumstances have recently changed and my wife is considering starting her own business for which she needs some capital for start up costs etc (around £40K).

I have just approached FD who have said that they will not "lend" the additional funds because it is for business purposes. Having spoken to a few others (i.e YBS) they have said the same.

I am finding this rather annoying as over recent years myself and wife have been putting significant amounts of savings into the mortgage in order to reduce the mortgage loan amount (it suited us at the time due to young kids etc). We had always assumed that if and when we needed the equity back we could re negotiate our mortgage (such as now) and get access to the funds. Starting to feel a bit sick that we didn't just leave it in savings accounts!!

Just to clarify we are more than capable of meeting the financial obligations by increasing the mortgage by £40K..

Any ideas ? Are we shafted?

dunstonh

I currently have a First Direct Offset mortgage that is due to renew in the next few months

Mortgage do not have renewal dates. I suspect you are talking about your deal coming to an end(?)

I have just approached FD who have said that they will not "lend" the additional funds because it is for business purposes. Having spoken to a few others (i.e YBS) they have said the same.

FD cherry pick the mainstream and low risk stuff. They dont like doing things which many others will not bat an eyelid at.

I am finding this rather annoying as over recent years myself and wife have been putting significant amounts of savings into the mortgage in order to reduce the mortgage loan amount (it suited us at the time due to young kids etc). We had always assumed that if and when we needed the equity back we could re negotiate our mortgage (such as now) and get access to the funds. Starting to feel a bit sick that we didn't just leave it in savings accounts!!

I'm afraid your assumptions were wrong.

Just to clarify we are more than capable of meeting the financial obligations by increasing the mortgage by £40K..

Any ideas ? Are we shafted?

Shouldnt be if you feel you are within normal lending criteria. You are just looking at the wrong lenders.

JQ.

I don't understand. I thought the First Direct Offset product was an interest only product and that all capital repayments were overpayments. As such should you require your capital repayments back at any time in the future you could just demand them back - why not just do that? It sounds like you're trying to release the cash via a remortgage, which is obviously proving more difficult. Ask them about just removing all capital repayments from the mortgage account to the savings account on your current mortgage and see what they say. Then once you've got that money out then remortgage.

looneyboy

JQ.. Problem was that they majority of the capital repayments we made were with our previous mortgage company, so did not have much "availiable balance" showing against the mortgage loan.. If that makes sense

JQ.

Thank goodness for that - you've seen my other thread on this. We are about to spend a considerable amount on the house doing some quite large extensions. We're using savings for most of the work but are a little short so were planning to withdraw all the overpayments we've made to First Direct and then remortgage after the works and take all our savings and cash back out during the re-mortgage. From what you've said on the other thread it looks like we won't be re-mortgaging with First Direct.

Thrugelmir

looneyboy wrote: »

JQ.. Problem was that they majority of the capital repayments we made were with our previous mortgage company, so did not have much "availiable balance" showing against the mortgage loan.. If that makes sense

Use your property as security for a business loan or finance arrangement. Speak to the commercial department of a bank.

Equity in property isn't a resource to be drawn on as cheap money for any purpose. (Said from a lenders point of view).