Equity Release

niamj

Hello everyone

I'd like some advice on selling a share of my house.

I need to raise some cash to start my business. I'd like around 15 or 20K.

I'm fed up of debts (massively inspired by MSE - thanks everyone), not that I have that many, but I don't ever want to acquire any new ones.

At the moment, my house is mortgaged to 115K. It's value is 160k. There's 20 years left on the mortgage. I am 27. The mortgage is in my name only.

I don't partricularly want to sell the whole house as I like living here.

I don't want to borrow more on the mortgage. I'd rather use up some of the equity my house has gained over the past 5years.

I'd like to sell a share of my house in return for a lump sum.

Does anyone know of a company that offers this kind of service to people who are not pensioners, and if so, are any of them reputable / trustworthy / not sharks out to rob me!

Many many thanks

niamj

Alan_M_2

There are a couple of things that concern me about this post.

Running a business is about more than selling the product/service, it's also about managing cash flow and sensible borrowing, more businesses go bust from poor cash flow than any other single problem, and that includes very successful businesses.

If you had a little business acumen you'd realise what a bad deal equity release is, you'd also realise that a remortgage is probably the cheapest way to borrow money for this very event.

I'm concerned about your worry of going into more debt almost as though you don't expect the business to generate enough money to pay off it's debt never mind make a profit.

Have you produced a business plan? a cash flow forecast? how far along with the business idea are you? I'd suggest taking a few steps back and getting the basics right and worry about exactly how much is needed before worrying about where it's coming from.

One of the single biggest mistakes by new business is underestimating the amount of capital required to start, don't fall into that trap.

Ian_W

niamj wrote:

Does anyone know of a company that offers this kind of service to people who are not pensioners, and if so, are any of them reputable / trustworthy / not sharks out to rob me!

In a word - NO. The mortgage lender "own" 70% of the house with a first legal charge over it and I don't think it would make sense for them to allow you to sell any of the house to a company - yes, I think your agreement with them will give them a veto as the property is their security against the loan. I can't see any benefit for a company either really.

Alan's words are very sound and you should give them a great deal of thought. The only options I can see are sell the property and use the surplus after the mortgage is repaid or remortgage to raise capital. Either way be aware of the risks - can't remember the figures but a very high % of new businesses fail in the first year.

BoL.