Equity Extraction

yotedbull

Hi all,

I own and live in a flat the mortgage on which comes to the end of its 3 year fixed period in November. The intention is to switch the residential mortgage to a buy to let, and rent it out.

I intend then to move into rented accomodation in a different county. The reason for renting is to check that I like living there before potentially buying.

My flat has increased in value significantly since I bought it. I would like to use the equity I have in the flat to fund a future deposit when I am ready to buy again (say in 12 months). In my mind this had meant simply getting the new mortgage, paying off the old, and holding on to the difference in cash myself. However, I have heard today that mortgage companies will not transfer cash to me, they will want to transfer only to a solicitor to pass on to another mortgage company. So I have only two options; remortgage on the existing outstanding value of the flat, or buy again straight away.

Is this true? What if any alternatives might I have?

Many thanks for your views.

kingstreet

Subject to the loan to value and the rest of the case, a "capital raising remortgage" should be possible.

ACG

Whoever told you that is wrong.

There is no issue with you raising money and the way you put it is how it would work. The money would go to the solicitor first and the solicitor would then pay you put presuming the reason for raising money fits with the lender there should be no issue.

yotedbull

Ok, that's good news. Thanks again for your responses, I shall continue on with my plans.

Cheers.

Thrugelmir

The new lender may have an issue with the source of the deposit, i.e. released equity. Worth checking with your existing lender if they will advance funds for the purpose of a deposit as well.