How can I borrow against the equity in my house?

wombleon

Can anyone please advise me? I own a house with a 70K mortgage - leaving an equity of approx 160K. I work part-time and the 70K is the maximum I can be lent against earnings.

I want to buy a property at auction as a renovation project (I am marrying a builder!) but don't know how I can borrow against the equity I have in order to purchase - is it possible, can anyone help?

Many thanks.

meanmachine_2

Wow. If you're honestly thinking about gearing up in the present BTL climate, I hope you've done your sums.

What's going to be your rental yield for this second property? How will you fund void periods? What is your experience in managing property?

I'm not saying don't do it, but most pro landlords are getting out of the market, not in.

If you're doing it because you've seen someone on the telly do it, do you think that makes sense?

Even the most bullish of economists are predicting 5 years of flat property growth, so your rental yield needs to be at least more than 5% for it to outpace a basic high interest account. But I'm sure you know all this already, right?

If you're looking to sell the property on, again you do relaise that the property market is flat right now, so easy gains won't be an option?

On the plus side, your builder buddy might help you squeeze a tiny amount of profit out of the venture.

wombleon

Thanks for the words of caution meanmachine - do appreciate your concerns here. The property in question is something quite unique (the last renovation project in a much sought-after village - we are still receiving notes asking if we would consider selling our own property even in todays market) - we would certainly not be considering an increase in portfolio if we were not confident of our projections.

Whilst it is possible to identify market trends there will always be exceptions -we are pleased to find that none of our properties are currently failing to make acceptable returns. Whilst it would be foolish to ignore the advice of experts do you really feel that anyone can confidently predict the market for the next five years - consider all the nationwide and world events which could happen in that time to affect it!? Personnally I like a bit of local knowlege and gut-instinct myself!

Builder buddy refuses to watch the property programmes you mention - he often finds the attitude of the would-be property developer quiet insulting for time-served craftsmen ("well we estimate two months to re-roof, re-wire, plumb, decorate and landscape this property - although I am a Marketing Manager with no experience of building I have put together an Ikea bookcase and I anticipate doing all this work myself for a cost of 7,000 pounds"!!)

I'll keep researching my fast equity-release options!

meanmachine_2

I'm confused. You seem very knowledgeable about the market, and yet you claim not to know how to MEW for a second property?!!

Ask the advice of an independent mortgage broker. There are tonnes in the yellow pages.

deemy2004

TRy explaining to your current mortgage holder what you intend on doing and have the sums ready to show how you are going to service the mortgage.

Basically they want paperwork to support their decision to give you more cash far in excess of your ability to repay, just in case you mess things up and go cap in hand to the FSA to complain about how the mortgage companye leant you too much money....