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Capital raising on an unencumbered property
katy123
Posts: 365 Forumite
I was talking with a friend whether this is possible for some lenders:
My friend owns a home £400k value with a £100k mortgage. Currently earning £80k and have no affordability issues. He has no cash savings and would like to remortgage and release £50k equity for general living expenses. This is because he wants make pension contribution through work which will reduce his take home pay in order to get 40% income tax relief. The reduced income will be topped up from the £50k cash from the remortgage? Is it a goer? From what I gather, most lender deem investing in a pension as high risk and a BTL as super safe. The risk is minimal give that the LTV would be 37.5%. Thanks
My friend owns a home £400k value with a £100k mortgage. Currently earning £80k and have no affordability issues. He has no cash savings and would like to remortgage and release £50k equity for general living expenses. This is because he wants make pension contribution through work which will reduce his take home pay in order to get 40% income tax relief. The reduced income will be topped up from the £50k cash from the remortgage? Is it a goer? From what I gather, most lender deem investing in a pension as high risk and a BTL as super safe. The risk is minimal give that the LTV would be 37.5%. Thanks
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Comments
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So he would clear £4.5K a month with a £100K mortgage and no savings.......but you said it was unencumbered, which is it?
Why not just increase his pension contributions - would a lot easier and he can do it anytime.0 -
BTL? Where does BTL come into it?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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foxy-stoat wrote: »So he would clear £4.5K a month with a £100K mortgage and no savings.......but you said it was unencumbered, which is it?
Why not just increase his pension contributions - would a lot easier and he can do it anytime.
with a mortgage, apologies, I got confused with terminology whilst googling.0 -
Is some of the released money going into a BTL?0
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No, just for general spendingThrugelmir wrote: »Is some of the released money going into a BTL?0 -
Lenders don't generally release equity and increase their exposure on a property for a person to make an investment into a pension to exploit a tax loophole....I am a Mortgage Broker.
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice0
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