Releasing equity to fund new home?

Jdeeney

Hi all,

So I live in a property which I inherited from my mother, officially inherited March this year but lived in for the past 9 years. There is no mortgage attached the property so I own the home outright, and it is me solely on the deeds.

The current situation is my partner is pregnant with our second child, and ideally we would like to move to a bigger home for obvious reasons. So, my question is, is it common/possible to remortgage or take out a secured loan or release equity to fund a good size deposit for a new home as we have little savings? We would be buying the home as a couple, but don't have a huge salary, around 25k combined at the moment. Our credit ratings are in the good - very good range for her, and (unfortunately, teen past still has a grip) below average but improving month to month for me.

All advice greatly appreciated, thanks all!

booksurr

so you, your GF and existing child live in your mother's old house but you want to hold on to its ownership whilst you buy another property to move to as your new main home?

yes of course you can get a mortgage on mother's home. Whether you can get a residential mortgage or a let to buy mortgage rather depends on what you intend to do with mother's home. Presumably you intend to let it.

as you will not be selling mother's home and you will be joint owner with GF of the new home then you will (both) be liable for the higher rate stamp duty on the purchase cost of the new home since you will then own 2 properties.

no one on here can say whether a lender will give you a loan on such a low joint income as that is down to the criteria used by each lender. You need to ask them. I assume you understand that a mortgage on mother's home to "release equity" is the same principle as a mortgage on a new home to buy it.

the difference will be whether it will be cheaper or more expensive to take out a Let to Buy loan on mother's house compared to a normal mortgage on the new home. For that you need to speak to a mortgage broker.

AdrianC

You live in a house you own outright.
You want to move to a bigger house.

The normal way to do that would be to sell your current house and use the proceeds plus a mortgage to buy the bigger house.

Is there a particular reason you don't want to do that?
I think we all know the answer - you think that you want to rent it out. Is it a sensible rental proposition? How much work would it need to be rentable? What's the yield going to be? Can you get over the "that's my mother's house" emotional involvement - and I think we know the answer to that, too, which is why you aren't considering selling it.

Running_Horse

Even a small mortgage will seriously upgrade from what you have now.

I looked into BTL and decided it wasn't for me. But that is your choice.

havingaball74

Running_Horse wrote: »

Even a small mortgage will seriously upgrade from what you have now.

I looked into BTL and decided it wasn't for me. But that is your choice.

Just being nosy, but why did you decide against it?

Hoploz

you haven't said what your plans are for the house you are living in. Do you plan to sell it after you buy the new one, or keep it to let it out for an income?

G_M

or keep it as a 2nd home?

or leave it empty hoping it will increase in value before you retire?

jackieblack

Yes it's theoretically possible.

You understand that the existence of the mortgage/secured loan on the home you inherited will reduce the amount you can borrow on the bigger home you want to buy?

Have you checked that the numbers stack up and that you will pass the affordability calculation taking the secured loan payments into account?