Releasing capital

Ang5050

Before I start I am about to plead very poor understanding of equity and mortgages. I have just retired, and have a pension income of just under 2,000 per month, but virtually no savings. I have no debts and own my house, which I think, but havent had a valuation, would sell for about 230-250k. I love the house, its on the edge of the Lake District, but need to sell now to enable me to have a small nest egg, and it is quite big, and maintainance isnt cheap. Its quite characterful, and has many original features being built in 1850s The house does have a range of old outbuildings attached. Meandering through my mind today is an idea to raise some funds without moving, but as I said understanding finance isnt my stong point. On the strength of the value of the house, theoretically is it possible to get a small mortgage, or release equity for a small conversion on the attached buildings into holiday let/? I realise that there are loads ofother considerations, but as an initial idea, would I be able to raise cash? Grateful for any guidance, or pointers.

AnotherJoe

You may be able to raise money, depends on your age and other factors. You'd need to see an architect and get some plans drawn up to get an estimate of the cost.
Sounds like a lot of work, some friends of mine have been down this route and frankly they've bitten off more than they can chew and wiped out their savings.
For example, lets say you raise £30k to refurb an old outbuilding or two into a holiday let and then some issue is discovered and you need an extra £10k to fix it, which is what happened to them except perhaps put a zero on the end of both numbers :eek::eek:

Then, and no disrespect but you say you are retired so you arent getting any younger, do you want all the hassle of being a landlord as you are getting into your later years ?

Suppose instead you got that architect, got planning permission to add a couple of holiday lets by converting the outbuildings. Might that then raise the value of your place, you could sell to someone looking to start up a small B&B / holiday cottages, you move into a smaller place that needs less maintenance and release money at the same time?

made up numbers follow;
Current value £250k
Value with PP £300k
Sell and buy more manageable place for £200k
£100k cash released

Ang5050

Thanks so much, thats really helpful, maybe what I should do. Eeek, your poor friends, thats awful and stressful too. I think I was just trying to find a way of getting round not moving! Vrey grateful for your time, and the figures are a useful guide too.

getmore4less

Is the house big enough to share on a holiday let basis may be something like rooms on AirBnB.

If you could make an outbuilding habitable(or even get a caravan you could use that and make more by letting the house but for fewer weeks

Do you want to get into a letting business is probally the big question to be asking yourself.

Brock_and_Roll

You have no debts or mortgage and an income of £2000 per month.....


That's an income of £461 per week before tax so on the face of it a single person should be able to live fairly comfortably.


Are you facing some big bills? Are you claiming all your entitlements - winter fuel, council tax discount etc?

AnotherJoe

Ang5050 wrote: »

Thanks so much, thats really helpful, maybe what I should do. Eeek, your poor friends, thats awful and stressful too. I think I was just trying to find a way of getting round not moving! Vrey grateful for your time, and the figures are a useful guide too.

Well those figures were of course made up, but i think its better you get the added value by getting PP rather than sell as is and let the buyer get it.

And aren't you going to have to move at some point? So why not do it when you are fit and able, can find a really nice place with similar views but lower maintenance, and can make a plan at your own pace, rather than a "distress sale" when an unexpected high maintenance bill comes up you cant afford, when some outbuildings have got more dilapidated and lower the value?

FWIW my friends are in countryside also where permission is difficult and got PP because by having holiday lets they were creating employment and also bringing in tourists. At the moment those plans are on hold because the money got eaten up by other stuff on their house so they've run out !

An alternative which might be harder to get is for example adding permission for a couple of residential houses on your site. A good architect can go through the possibilities and costs.

Ang5050

Thanks so much everyone.
Getmore4less, that was my initial thought, but I dont have the capital to lay out to make the outbuildings habitable. Ive thought about AirBnB, but its not really a route I'd consider at the mo.
Brock and Roll - Not facing any big bills, but I do want to have a better 'Chunk' to draw on if necessary - car, boiler, etc.
Thanks again Another Joe. You make very good sense. Although there is room to build in the garden, planning permission has been refused in the past due to access, but that is also something I will take up when I approach an architect for some more specific advice., and then look again, armed with figures as to what would be the best move.
Thanks again everyone, what a brilliant resource this is for a financially clueless person (My Dad would turn in his grave - he was an accountant!)