I want to release money from my house.

JordanTBrighton

I am only 25, I got a large inheritance from my grandad when he died.
I purchased my first house last year in brighton (which I renovated)
I brought it for £325k, did it up by putting £50k into it (my own money) and had it valued recently from 3 different local estate agents for £499k.

My wife has gotten very attached to the house (although I am not fussed) however due to there being over £200k cash tied up in the house I want some of it.

I am mortgaged to my limit (as of 6 months ago) and recently changed jobs which I have a larger salary.

I want to be sensible about this and get some money out of my house for a buy to let. Brighton is perfect for the rental market and it's something i've always wanted to do.

I don't want to go into the bank and get laughed at for my plan considering my age and what I do and don't have.

I wanted some advice on what to do, where to go?!? I have my mortgage with Barclays (the Woolwich) all my banking and credit cards also.

I wanted £30k out of the house, considering it's worth £500k it doesn't seem too much of a stretch?

kingstreet

Options;-

sell the property

additional borrowing from existing lender (subject to status and affordability)

second charge loan from third party sitting on top of existing mortgage which is unaffected (subject to status and affordability)

remortgage to a new lender to repay existing mortgage and borrow more (subject to status and affordability).

Typically, you'll need a deposit of 25% or more of the purchase price for a BTL mortgage, subject to rental income cover calculations.

JordanTBrighton

So this is only done on affordability? regardless that i own 50% of my property? because the BTL will pay for itself and the additional lending on my house?

betmunch

JordanTBrighton wrote: »

So this is only done on affordability? regardless that i own 50% of my property? because the BTL will pay for itself and the additional lending on my house?

Its not solely on affordability, but that will be a limiting factor.


This shouldn't be a problem though if you have got a higher salary at your new job, then you are no longer mortgaged to your limit.


If you took a new deal 6 months ago, check if you can leave now without penalties and move to a new lender. If you do have penalties then check the further advance options and secured loans.

Landofwood

These threads seem to pop up every week and I never understand them.

If you are mortgaged to the max and can't borrow more money then your only option is to sell.

getmore4less

Mortgage
income
BTL cost
Rent.

kingstreet

JordanTBrighton wrote: »

So this is only done on affordability? regardless that i own 50% of my property? because the BTL will pay for itself and the additional lending on my house?

Affordability for the residential mortgage is about your income.

Affordability for a BTL mortgage is about the rent.

If you want to raise money on your current residential property, it's your personal income that counts.

JordanTBrighton

This was where i've been getting lost. I thought because I own so much of my property, they would look at that as the collateral?!

I appreciate all of your advice!

kingstreet

Yes, that's the security.

However, if you borrow on the residential, you have to have the income to justify it on affordability as I said.

If you raise the money on the BTL, it's the rental income calculation which determines affordability.

So, the chosen security determines the affordability requirement.

These days there is no self-certification of income for those with big equity in their homes. Every borrower has their income scrutinised in one way or another.

Stevie_Palimo

JordanTBrighton wrote: »

This was where i've been getting lost. I thought because I own so much of my property, they would look at that as the collateral?!

I appreciate all of your advice!

That does not matter it works on affordability and as you say you are maxed out they will not entertain in the most likely case here.


The other thing here and forgive my bluntness but can I ask why you would ask people on a forum if you can get money from a property as you may be told yes and then no by some posters but really you have one option to find this out and that is ask the bank.

dekoder

The other thing here and forgive my bluntness but can I ask why you would ask people on a forum if you can get money from a property as you may be told yes and then no by some posters but really you have one option to find this out and that is ask the bank.

I disagree, some of the banks mortgage advisor's are clueless and many posters in this thread and forum are experiences mortgage brokers. Not to mention it's only one bank criteria you'd be enquiring about.

If you would to go through with this I strongly advice you to do it through a broker - you can link equity release with BTL purchase and good broker can make it a LOT easier.

getmore4less wrote: »

Mortgage
income
BTL cost
Rent.

Post the above if you want to check if you have a chance.