Can I remortgage by downsizing without a job?

njbhorn

OK MSE colleagues my situation is like this

I have a property worth 700K
I have a mortgage of 340K
I have just been made redundant as has my wife so we have about a 150K pay off
We have a Pension Fund approx 600K
I am 54
We have 2 properties and get about 2K a month rental income from them
We would like to "retire" and buy a property for approx 450K
Is there anyway of reducing the mortgage from 340K to something smaller without a job?

I would like to be able to put 100K from our 150K pay off into our pension and get the tax relief on it. Then when I am 55 draw a sum from the pension to pay off any outstanding mortgage.

So I would like to use the equity from my current property approx 700 - 340 = 260K to reduce the mortgage from 340K to approx 190K

However the stumbling block I see is when I go to the bank to say I want to reduce my 340K mortgage to a 190K mortgage but on another property without a job they will not agree. Is my assumption correct?

many thanks for any help.

Nigel

amnblog

Where will the income come from to pay the new mortgage?

Do the rental properties have mortgages on them or equity in them?

njbhorn

Many thanks for quick response.

Income would come from a combination of flat rentals 2K, savings approx 50K and partiime work or some sort of job paying a small salary. Once I am 55 (less than a year) I can draw out enough to pay off most of mortgage) Would a bank take any of this into account?

There are no mortgages on the rental properties, both worth approx 250K each and owned outright.

amnblog

Your bank will hate this plan and won't go for it but a good broker may get this lending arranged for you.

njbhorn

Many thanks. Know any good brokers

amnblog

I am very close with one!

njbhorn

I may well be asking for more information soon then!

Many thanks

pjread

how long is "less than a year" ? By the time you've sold and bought etc etc you might be rather close, I wonder if "limping on" to 55 then looking at I'd guess needing sub-50k of finance, which you may well be better off raising against the let-out properties (tax relief on interest)

That's just my initial thoughts, if you're somehow already in progress with selling/buying the scenario changes a little and "find a good broker" is the only sane response.

ispookie666

With that sort of money, why not a proper IFA and a good broker. I appreciate your presence here and the information gained, it is always the best.

Brighty

"So I would like to use the equity from my current property approx 700 - 340 = 260K to reduce the mortgage from 340K to approx 190K"

Surely if you sell for 700 and pay off the 340, you're left with 360 not 260, meaning you'd only need a 90k mortgage? Or am i missing something? Could even pay the 90k out of your redundancy payoff and be mortgage free now.

Brighty

pjread

Well I can see why the OP might want to maximise the 'benefit' by putting a chunk in the pension tax-free to draw down within a year when they turn 55, but as it's within a year I can't see a massive reason not to just wait a few months...