pay mortgage with interest from savings?

withnail71

Dont know if anyone can help? I am thinking about selling my house which is worth about £350000 and i dont have a mortgage. i was thinking about banking the money in a high interest account. then taking out a mortgage to build my own house and se the interest from my savings to pay my mortgage. but i only earn £25000 a year, would it be possible for a bank to end me around £250000 based on this? does it sound possible?

any help would be appreciated.

thanks in advance

Al_Mac

It sounds very possible.

But would you earn more net interest than you need for the payments? Unlikely.

:beer:

cloud_dog

Withnail your proposal is not cost effective. You would be better off using £250k from your money and then only having interest on the remaining £100k (what a nightmare - enjoy) :-)

cloud_dog

david78

You could take out an offset mortgage and offset it 100% with part of your savings. Put the rest in savings accounts paying interest. Then pay off the capital on your mortgage using money from your £25k income.

Hobo_2

Good call, david78, maybe?
withnail71 will struggle to get a mtg that size cos lenders usually work off multiples of earned income (salary)

Walletwatch

From a financial perspective, there would be no difference absolutely between:

1. Having an offset mortgage and offsetting your mortgage with the proceeds of the sale.

2. Paying the whole amount in cash from the proceeds of the sale, instead of going for any mortgage, offset or otherwise.

If I were in your position, I'd only need a mortgage if I am planning on beginning the construction before the sale of the present house takes place - even in that situation, I'd go for a non-offset mortgage for whatever amount I need, and take advantage of the lower interest rates, compared to offset mortgages. I would also ensure that the mortgage I go for doesn't have any prepayment penalties, so that the same could be repaid in full, once the existing house is sold.

herbiesjp

I think you will struggle as Hobo rightly says lender will either lend on multiples or some ledners will lend on affordability - either way you are looking at 10 times your basic salary.

However there may be other finanace options available, depending on the actual details of what you intend to do.

withnail71

any advice on who would be best to speak to about my proposal?
i was really hoping to hold onto the cash as savings rather than put it into a house, as a longterm investment

withnail71

ING are paying 5% currently and the wife doesnt work therefore non taxpayer so she gets tax breaks on any savings which helps. just not sure who is best to approach about my idea so many to go for, probably a lot of knock backs. surely someone would lend me the money. i have no bad credit history whatsoever paid off a few mortgages in the past no problems. Any ideas anyone?

withnail71

anymore help would be appreciated

thanks

withnail71

Dont know if anyone can help? I am thinking about selling my house which is worth about £350000 and i dont have a mortgage. i was thinking about banking the money in a high interest account. then taking out a mortgage to build my own house and se the interest from my savings to pay my mortgage. but i only earn £25000 a year, would it be possible for a bank to end me around £250000 based on this? does it sound possible?

any help would be appreciated.

thanks in advance