Releasing equity to buy another property

DrivingMissDaisy

Hi,

I hope some of you can shed some light on this situation, it isn't perfectly clear to me as such. I've been told that we can release £150,000 equity from our house. If we went ahead an released this equity and bought a second property for the exact sum of £150,000, is that doable ?

This way we would have an additional £150k mortgage on existing property but the new property would be mortgage free ? Is this correct ?

Or would lenders insist on only funding the deposit amount for the new property, so in my example they would only fund 30-40% of £150k and expect me to take another mortgage for rest of the amount ?

Thrugelmir

First step is to establish if your existing lender will allow a release of the equity for his purpose.

OnTheRun

DrivingMissDaisy wrote: »

Hi,

I hope some of you can shed some light on this situation, it isn't perfectly clear to me as such. I've been told that we can release £150,000 equity from our house. If we went ahead an released this equity and bought a second property for the exact sum of £150,000, is that doable ?

This way we would have an additional £150k mortgage on existing property but the new property would be mortgage free ? Is this correct ?

Or would lenders insist on only funding the deposit amount for the new property, so in my example they would only fund 30-40% of £150k and expect me to take another mortgage for rest of the amount ?

If you've been told you can release the equity, then sure it's doable. You will have the money to spend as you want (assuming there were no strings atteached to the offer), so ignoring buying expenses (solicitors fees, stamp duty, etc) you could have a £150k property mortgage free ... and a £150k mortgage on the existing property.

(Don't forget stamp duty goes up significantly in April for second home owners, which is what you will be)