Remortgaging to release equity for investment

mbuyout

This is one for the mortgage brokers on the thread please. Would be grateful for any tips.

I have got the opportunity to participate in a Management Buyout of the company that I work in, with me as one of the senior managers. Unfortunately, I don't have a lot of money to invest at the moment. However, I have a mortgage (currently around 50% LTV) and wondered if I could release equity for this purpose?

I am aware that most lenders will not accept this as a reason to remortgage and release equity. However, are there any specialist lenders who might be able to help? I talked to L&C to check if they could help find a lender, but they never got back.

Thanks!

muhandis

Please note, I am not a mortgage broker but have faced a similar situation where my partner raised capital using equity on a house to invest in a family business -

As you've said, you will most likely draw a blank with traditional lenders. If you are an HNW or your house is high value, brokers like largemortgageloans or Enness might be able to get you a mortgage with a private bank.

Your best bet might be a second charge mortgage (which is what we ended up with) - no impact on your current mortgage, up to 85% LTV, quite a few lenders in the market now and they do allow you to borrow for investing in a business. As far as I can remember it was a very smooth and quick process.

As you would expect, it's higher risk to the lender so the interest rates are higher than a normal mortgage.

Read up on second charge mortgages and talk to a broker that also gives advice on second charge mortgages. They might be able to help.

mbuyout wrote: »

This is one for the mortgage brokers on the thread please. Would be grateful for any tips.

I have got the opportunity to participate in a Management Buyout of the company that I work in, with me as one of the senior managers. Unfortunately, I don't have a lot of money to invest at the moment. However, I have a mortgage (currently around 50% LTV) and wondered if I could release equity for this purpose?

I am aware that most lenders will not accept this as a reason to remortgage and release equity. However, are there any specialist lenders who might be able to help? I talked to L&C to check if they could help find a lender, but they never got back.

Thanks!

amnblog

As suggested, second charges Lenders are more likely as a source to raise funds for business purposes.

You need a decent Broker.