Mortgage reserve and putting it to use

lavenderlady

Good morning all.

Hubby wants to leave his job and for us to buy a small business where we can work together and support our disabled son.

This post is in a couple of stages so please bear with me.

Our actual mortgage is just over 120k on a property worth 700k. We have been advised the rental income will be approx £2000 a month. We want to rent this property out (mortgage company said ok) rather than selling it because we are on a 1.25% mortgage with a high mortgage reserve pot at the same inerest rate that we would lose if we sell. Also adjusting for mortgage reserve payment and costs We should still achieve a rental yield in double figures.

Second part. We have a mortgage reserve of 150k but we cant use it to buy a business so need to find another way to get at it. We have another property that is mortgage free that we are going to sell for the funds to invest in the business. Could we use the mortgage reserve to put a mortgage on the propety and then sell it so we get paid out twice if that makes sense?

I will deal with the actul business side and risks later, at this stage im just looking at finances.

Hubbys job means he has to live away and we just want to live and work together so we can be there for our son. We know we will need to take financial advice but just wanted to run some ideas by you guys so i can get some sort of order inside my head!

Thanks guys

getmore4less

What sort of mortgage reserve is this?

what are the rules for accessing the funds?



Getting a mortgage on the other place, paying it off with the reserve(if allowed) and then selling will just cost money.

You have to live somewhere if the business is live in can the reserve be used to fund that bit and the sale proceeds the rest.

lavenderlady

getmore4less wrote: »

What sort of mortgage reserve is this?

what are the rules for accessing the funds?



Getting a mortgage on the other place, paying it off with the reserve(if allowed) and then selling will just cost money.

You have to live somewhere if the business is live in can the reserve be used to fund that bit and the sale proceeds the rest.

I think its just a standard reserve however when we took it out we were able to 'buy' the larger reserve amount so that is why it is so high. Its a readily available amount sat in our account, no waiting around to to use it. To be honest we should have made more use of it with it being such a good rate. We havent used it for about three years and it is such a good opportunity.

The business is live in however we arent allowed to use the reserve to buy a business.

Thrugelmir

lavenderlady wrote: »

We want to rent this property out (mortgage company said ok) rather than selling it because we are on a 1.25% mortgage

Have you confirmed with the lender that this rate will remain in force and that CTL will be granted on an indefinate basis.

lavenderlady

Thrugelmir wrote: »

Have you confirmed with the lender that this rate will remain in force and that CTL will be granted on an indefinate basis.

Yes confirmed the rate will remain the same. No we wont be allowed to do this indefinitely and things may change with our son so hubby may go back to work. But for now it seems like a good opportunity to use the very good mortgage we have.

Thanks again