Help Re; Getting Money Out of Our Property!

tturnstill1988

Hi All

Here is the situation:
Me and my wife bought our first house last year for £149,000. We put down a small deposit and after paying back our monthly mortgage (and seeing the majority of it swallowed by interest!! :mad: ), we have an outstanding mortgage of £137,000.

The house was under market value at the time as it was extremely dated. I have completed transformed the property inside and out, and have had the house valued. It is now worth £200k.

Now.... We (me and my wife) could do with some cash. Firstly to pay off some debts but also to invest in other things not worth mentioning here. We have come to the assumption that the only way we can access any decent amount of cash is to sell up (for around £200k) and then by the time fee's and charges etc are counted we may have £50k in our pockets for our troubles... ?

Is this the only way?

Because, somebody (who I dont think actually has any more knowledge than me!), suggested that we just tell the bank (our mortgage is with Nationwide so i guess he means them!) that we want to withdraw some money and increase our mortgage.

Whilst that doesn't sound straightforward to me, is something similar a 'thing'?

Is it possible to go to the bank and 'remortgage' for closer to its current market value and receive the cash difference? Say if we remortgaged at £190k would they then give us £50k ish??

We're both in our late 20's so I dont think this would class as 'equity release' options?

Anybody that knows what i'm asking and can give me an answer would be extremely welcomed!

Thank you!

:T

Cakeguts

Who did the valuation? I hope it wasn't your local estate agent? Have your incomes increased over the last year so that you can afford a bigger mortgage?

G_M

tturnstill1988 wrote: »

.... bought our first house last year for £149,000. ........we have an outstanding mortgage of £137,000.

The house was under market value at the time .......It is now worth £200k.

... could do with some cash. ........come to the assumption that the only way we can access any decent amount of cash is to sell up (for around £200k) and then by the time fee's and charges etc are counted we may have £50k in our pockets for our troubles... ?

Is this the only way?

the simplest way, if it works financially, is to re-mortgage or take out a 2nd mortgage.

You say there is £63K of equity in the property. Are you sure
a) that your curent outstanding mortgage is 137K ad
b) that the current vauation is £200K

And would you qualify on your incomes for a larger mortgage?

If so, ask your current lender for a 2nd mortgage.How much extra do you want/need?

Bass_9

As per cakeguts comments, make sure you could afford to take out a bigger mortgage and not put yourself into financial difficulty. Have a careful think about what is necessary, of course that is your judgement...

I think you're talking about a remortgage scenario but I'm not sure whether you would be eligible to do this so quickly. I could be completely wrong there.

Also consider that some buyers may see what you bought the house for only last year and think, well I could buy a fixer upper and do that myself. However if it's a decent/attractive house you should be ok, perhaps check out the current competition!

tturnstill1988

Hi all
Thanks for the replies!

The valuation was done by two estate agents locally. They!!!8217;re both around the same figure.

Regarding increase in payments, yes it is something we can both afford and shouldn!!!8217;t have an issue getting approved for.

It is just an instant lump sum we!!!8217;d like and knowing there is that money in our house is what we!!!8217;re interested in. However best case scenario would be to access some of that money without having to sell up.

So, a second mortgage is a thing? I.e the bank would give us cash funds, in exchange for the mortgage going up.

Silly question probably but is this a common thing?

Thanks again!

shirlgirl2004

Yes it's very common, you will need to have owned the house for at least 6 months.

Cakeguts

tturnstill1988 wrote: »

Hi all
Thanks for the replies!

The valuation was done by two estate agents locally. They!!!8217;re both around the same figure.

Regarding increase in payments, yes it is something we can both afford and shouldn!!!8217;t have an issue getting approved for.

It is just an instant lump sum we!!!8217;d like and knowing there is that money in our house is what we!!!8217;re interested in. However best case scenario would be to access some of that money without having to sell up.

So, a second mortgage is a thing? I.e the bank would give us cash funds, in exchange for the mortgage going up.

Silly question probably but is this a common thing?

Thanks again!

If you read through enough threads on here you will see that many estate agents get the valuations wrong. You will have to see what the bank values it at.

A second mortgage is a loan secured against your house so if you fail to pay both mortgages your house could be ropossessed which is why it is important to only do this if you can pay the increased monthly mortgage repayments.

Fosterdog

The way you are talking about doing it will leave you with 0% equity in your own home, if they even allow 100% borrowing.

Also your first sentence is complaining about how much has been eaten up by interest, if you do this you will be paying a lot more interest than you have so far, are you prepared for that to go up too?

You don't want to say what your investment idea is which is fair enough but you also mention clearing debts, that would be turning unsecured debt into secured debt which is never a good idea. Investments don't always work out, even a "sure thing" is a gamble, is that gamble worth risking your home for?

barbiedoll

I’m sure that I’m not going to be the only one to tell you what a bad idea this is.

The Debt Free Wannabee board is littered with stories of people who have done just this and who are, many years later, still struggling to free themselves from the debt trap. (Myself included!)

For a couple who are still relatively young, you sound as though you have done very well. You have worked hard to increase the value of your house, but it doesn’t sound like you regard it as a home? You talk of selling up to gain 50k but where will you live if you do? And what do you need the cash for? There are plenty of ways to pay down your debts, possibly more cheaply than you are currently doing. I know you may not want to discuss your plans for the cash but if it’s for new cars, holidays, or any other consumer goodies, please bear in mind that while a new car may last you 15 years, and holiday memories, a lifetime, you’ll possibly still be paying for them in 20+ years time. If the interest rates rise, or if one of you loses your job, or even if you have a baby, you may find yourself in trouble.

I know that once you get a figure in your head, it’s hard to let it go. £50,000! That’s a lot of cash, you could do SO much with it! As many us can testify, you find yourself looking for things to spend the cash on, rather than working out how much EXACTLY that it is you actually need.

So....why not forget about the magical 50k and sit down and work out how much you do need? Say (for example) your debts are 25k. Find out the way to get the debts on the lowest interest rate that you can (loads of help is available on this site). Then....work out how you can pay them off as quickly as possible. At the same time, sort out your finances so that you can save as much as possible. If you do need to remortgage, work out the lowest sum that you need to borrow. And then come back here to ask for advice on your options if you feel a bit overwhelmed.

I urge you both to think really carefully about your plans, they’re potentially going to affect the rest of your life!

Gwendo40

barbiedoll wrote: »

I!!!8217;m sure that I!!!8217;m not going to be the only one to tell you what a bad idea this is.

The Debt Free Wannabee board is littered with stories of people who have done just this and who are, many years later, still struggling to free themselves from the debt trap. (Myself included!)

For a couple who are still relatively young, you sound as though you have done very well.!

In what way does taking on a s***load of debt that they can't afford constitute ''doing very well''?

OP I would be very sceptical about the fantasy valuations given out by EA salesmen touting for business, you may have made the property more saleable but I doubt you've added over 30% to the value unless you've substantially extended it.

Nebulous2

Language is very important when you are considering something like this. You aren't getting money out of your property. You're increasing your debt and putting up your house as security - for the mortgage company to claim if you can't pay it back.