Releasing Equity (no current mortgage) Question

katy123

Hi All

I am in the process of selling my main residence in Essex (valued £400k, mortgage £200k). I have just gone self-employed with earnings of £10k (was on £50k salary before). We are in the process of selling the house because we want to move areas. We are not ready to buy in the area that we want to move to as we want to familiarise ourselves with the area first. The problem that I realise is that we can’t borrow to buy as a new self employed individual. We have savings of £200k + the £200k equity from the house sale which would give us £400k. Assuming the house we choose (very likely) is £400k and we proceed as a cash buyer, is it possible to remortgage once I increase my earnings to say £50k whilst being self employed and with a 2 year track record (2019).
I wish to release my then earnings (say 4 times, so £200k). It’s not a typical mortgage in that it serves the purpose to buy a property but to release as equity). Is it possible, I’m guessing there’s a limit to how much one can release and also they will ask you what you want the equity for? Given that interest rates are low, I intend to fix it for 5 years and invest the funds in my business, renovate the house. What reasons do lenders like and will they really allow something to realise £200k of equity on their main home?

Oh, forgot to add, I'm not looking at equity release products, I'm only 35.

Keezing

Remortgaging an unencumbered property is very straightforward and you'll be subject to all the regular affordability tests etc. If you're asked for a reason just tell the truth - renovations. Generally lenders like it when their asset is improved.

Some lenders will offer you remortgage rates whereas some will offer you new purchase rates (which are often cheaper). A broker will be able to advise the best lenders for your situation.

katy123

Keezing wrote: »

Remortgaging an unencumbered property is very straightforward and you'll be subject to all the regular affordability tests etc. If you're asked for a reason just tell the truth - renovations. Generally lenders like it when their asset is improved.

Some lenders will offer you remortgage rates whereas some will offer you new purchase rates (which are often cheaper). A broker will be able to advise the best lenders for your situation.

THank you for your prompt reply. But £200k for renovation, surely application will be rejected.