Releasing equity

siouxchief

Hi there,


If I have a mortgage on house 1 of 500K and I build a new house 2 somewhere else worth 500K. Can I sell house 1 then move into house 2 but also move the 500K mortgage from house 1 to house 2 and just keep the 500K money from the house 1 sale in the bank?


Essentially rather than pay off the mortgage from the sale of house 1 I'd like to keep the cash and use the released equity for another project.


Apologies if complicated


Thanks
David

kingstreet

No. There are no 100% mortgages for the purpose you describe.

You can usually only port the terms of a mortgage when you sell and buy concurrently and you have to qualify for the new mortgage and meet lender criteria on things like maximum loan to value.

You would sell house one and the mortgage would be repaid. You would then do a remortgage of an unencumbered property of house two, with the maximum loan/LTV subject to purpose of loan, affordability etc.

siouxchief

Thanks kingstreet, much appreciated. Getting a remortgage on an unencumbered property seems to be the terminology I will be looking for when getting that mortgage then.


Kind regards
David