Advice needed...thanks

[Deleted User]

Hi

I wasn't sure how to title this so I'll just dive straight into my situation! My wife and I recently got married. We each owned our own properties but mine was sold in Feb 2012 leaving 5k equity in my saving account. I moved into my wife's property which is tied into a fixed rate deal until 2016. The flat is too small for us(I have been paying for a storage space since I moved out of my place). Anyway we are now looking at our options for buying a bigger place and we are thinking about approaching my wife's lender to see if they will do some kind of "equity release". This money, plus my 5k, would hopefully give us a deposit of between 5% and 10%. My questions are:

Is this kind of equity release possible in the current climate?

If we are only able to raise a 5% deposit, are there any 95% mortgages out there?

Could we "port" the mortgage instead and top it up for a bigger property? Would this be subject to the early redemption fee?

Thanks

Thrugelmir

Deleted_User wrote: »

Could we "port" the mortgage instead and top it up for a bigger property? Would this be subject to the early redemption fee?

Thanks

By adding your name. It would be treated as a new mortgage application entirely. So no port, and yes fees may well be charged.

Unlikely that equity would be released for purposes of a deposit.

Source of deposit would not be acceptable by new lender either.

[Deleted User]

Thrugelmir wrote: »

By adding your name. It would be treated as a new mortgage application entirely. So no port, and yes fees may well be charged.

Unlikely that equity would be released for purposes of a deposit.

Source of deposit would not be acceptable by new lender either.

Do the lenders actually need to know what we are using the money for? Can't we release equity for 'home improvements' but use it to bolster our deposit instead?

Thanks

Annisele

Deleted_User wrote: »

Can't we release equity for 'home improvements' but use it to bolster our deposit instead?

If the lender asks what you want the money for, then you have two choices: tell the truth, or commit fraud. The truth will make life far easier in the long run!

In the unlikely event the lender doesn't ask, you don't have to tell them.

Thrugelmir

Deleted_User wrote: »

Do the lenders actually need to know what we are using the money for? Can't we release equity for 'home improvements' but use it to bolster our deposit instead?

The new lender will wish to know the source.

As has already been said. A misdeclaration is fraud. A sure way to destroy any future financial dealings with financial institutions.

[Deleted User]

We're both very law abiding people so fraud is out of the question! I'm surprised to hear that the equity release appears to be such an issue. Surely as long as we can prove we have the required deopsit, and the mortgage is affordable based on our incomes, it won't matter if some of the deposit is from equity release? If so, are you saying the only accepted deposits are from savings only?

Thrugelmir

Deleted_User wrote: »

We're both very law abiding people so fraud is out of the question! I'm surprised to hear that the equity release appears to be such an issue. Surely as long as we can prove we have the required deopsit, and the mortgage is affordable based on our incomes, it won't matter if some of the deposit is from equity release? If so, are you saying the only accepted deposits are from savings only?

Mortgage lending is for people to purchase a home. Not speculate with or build a business. As far as lenders are concerned there's more appropriate sources of finance than withdrawing equity. By leveraging up the risk is entirely the lenders. Days of houses being cashpoint machines are over.

Having said this. Primarily banks need to contract lending and reduce exposure. So its merely a return to a time pre boom.

[Deleted User]

Isn't that how property developers work though? They start with one property and then use the equity to buy another and so on? I don't see what the risk to the current lender is as we will simply have less equity when we do eventually sell the property and they will have more.

Thrugelmir

Deleted_User wrote: »

Isn't that how property developers work though? They start with one property and then use the equity to buy another and so on?

Did work. The lenders that were lax are out of business or been swallowed up. Required rising house prices (1999-2007) to provide capital appreciation.

I don't see what the risk to the current lender is as we will simply have less equity when we do eventually sell the property and they will have more.

Risk to lender.

Interest rates rise, house prices fall, no tenant no rental income, you lose your job.

Mortgage lending isn't priced for this level of risk. Equity is of no interest as lenders don't want the cost or hassle of recovery. They just wish to be paid every month for 25 years on time.

Batsman81

How much equity does your wife have in her place? If its over 20% you could look into a Let to buy?

That way, you could rent out the existing flat and release some money for your new deposit. The let to buy is exactly that - letting your existing property to buy another. Releasing money this way is a legitimate source of deposit for your new property.