Equity Release to finance new home.

massa121

I own a property which has got mortgage £58000. I believe the property is worth at least £185000. I want a buy another property as a second home which is worth about £180000 and move in with my partner who is ill & want to live near her family. I intend to give my property on rent to pay existing mortgage. I do not want to sell my house and my income is not much about £13500 gross but secure. What I want is raise a deposit of £46750 for new home.

Please can anyone advice which is the best way to get equity release?

macaque_2

massa121 wrote: »

I own a property which has got mortgage £58000. I believe the property is worth at least £185000. I want a buy another property as a second home which is worth about £180000 and move in with my partner who is ill & want to live near her family. I intend to give my property on rent to pay existing mortgage. I do not want to sell my house and my income is not much about £13500 gross but secure. What I want is raise a deposit of £46750 for new home.

Please can anyone advice which is the best way to get equity release?

You should only speculate with money you can afford to lose.

If your rented property fails to cover the mortgage payments at any time, this will trigger a nasty chain of events. It will start with punitive interest rates followed by foreclosure. A property sold under these conditions could easily lose £50K on the value. You could end up having to sell your first home just to square the books.

If you are determined to speculate on property, I stongly urge you to read this forum for the next few months before taking the plunge.

Pobby

Me,I wouldn`t have anything to do with property investment right now.I am in the fortunate position of being mortgage free with enough savings/investments to by another house outright.It would be madness right now when I can get a far better return in savings than I would get from renting.

My feeling is that prices will fall or at the very best will stagnate and stagnate for years to come in most areas.

massa121

Many Thanks for replies. Sorry it took so long to reply. I guess I will wait then. The reason I thought of buying is that my partner is currently renting & paying about £70pw rent. So I thought if I buy a property in the area she wants to live then instead of paying rent we would add a little bit more & buy instead. I have also now realised the property I was looking for was way beyond my capabilities so will be looking to buy property worth in the bracket of £140 max. Considering my own property will be let out I think I will be able to afford it. Looking at couple of sites my property would be worth around £200k.

My credit record is good. I thought about further loan on my mortgage but I understand lender do not take into consideration rental income I would be getting from my property to pay off present commitments. Is that right?

Biggie

To get a buy2let mortgage the lender will only allow you to mortgage as much as the rental return (best case some want 130%), as rental yield is so bad no doubt you will have to leave a fair bit of equity in your current property. Also consider the additional overheads Agent fees, Maintenance, vaccant periods etc etc...

so as an example (with out any intreast rate figures) lets assume you can release an additional 100K from your property. This will leave you with a 147k ish mortgage so you need at least £800 pcm rent.

You then use the 100k as a deposit on the new place. lets say you borrow 4 x your salary :eek: . That allows you to borrow 54k so you can buy for 154k.

BTW - These figures look dangerous to me based on your salary.

Please note this is a rough example only you will need to factor in the all fees and costs. And if your rental is low you may not be able to borrow as much on your b2l.

I would avoid any loans as they charge very high intreast, you may well just be better of renting as you currently do.

Hope that helps is some way.