Equity release for new property purchase

cofidre29

My wife and I have overpaid plus reduced the term of our mortgae considerably in the last few years and now realise we've sitting on an asset that isn't doing much for us. We've still got about another £80k to go on the mortgage. What we are thinking of doing is increasing the mortgage to £180k and taking the £100k and buying another proprty that we'll go and live in and rent our current property out. Has anybody else done this recently? What are the pitfalls of doing it and which banks/building societies seem to understand the idea more than others.

Thanks in advance for your replies

dali-cat

I've looked into doing this myself, but it seems your best bet is to borrow from the equity in your house - but stay there and rent your new property out, rather than your existing home. Apart from the fact that this stops you from having the hassle of having to move out of your own home, this is also because a lot of mortgage providers will not allow you to rent out the house you have the mortgage on, or you will have to have a specific type of mortgage to allow you to do that, or get their permission for who you have as a tenant (the list of conditions goes on and on). However, if you just get an any purpose loan secured against the equity of your property(IE: raise your mortgage), it is "nothing to do with them" what you do with that money (quoted directly from my mortgage adviser). You can then buy your second house as a cash buyer (good bartering tool to start with) and rent it to whomever you want, without getting your mortgage providers' permission first. I'm currently in the process of looking at properties to do exactly this myself, but might have to get an additional buy to let mortgage on the property I want to buy, as I can't quite get enough borrowing power just on my salary alone! Am awaiting advise on this, so will post an update when I find out how easy this is!

missile

You do not give any info on your age, income, or what your objectives are? Depending on where you live this may not be the right time to be investing in buy to let. Have you considered downsizing your property?