Reason needed for remortgage equity release?

alx3365

I am trying to remortgage a buy-to-let property I own in order to release equity from the property.

I would be releasing around 80k from the property.

But my mortgage broker has said I need to give a reason for why I want to release equity from the property.

I wasn't aware providing a sufficient reason was a requirement when releasing equity from a property you own. Surely so long as I ensure the necessary amount of equity remains in the property (25 - 40 percent) and can demonstrate I can cover payments (either myself or via rental payments), then whatever reason I need it for should not matter.

I'm actually taking equity from the property because I don't feel holding investment property in the london is as profitable as it was and want to diversify. This could be in other property ventures or other types of investments - I have not determined a precise investment strategy yet, but my current mortgage deal has come to an end so I'm releasing equity now.

So my question is - in the eyes of a broker/lender, what reasons are good enough reasons for why someone can withdraw equity from their property?

Thanks

middleclassbutpoor

Lenders can be cautious when it comes to releasing equity for debt consolidation etc.

You should tell the truth - the reason for taking money out is to make a further investment.

Thrugelmir

alx3365 wrote: »

I wasn't aware providing a sufficient reason was a requirement when releasing equity from a property you own. Surely so long as I ensure the necessary amount of equity remains in the property (25 - 40 percent) and can demonstrate I can cover payments (either myself or via rental payments), then whatever reason I need it for should not matter.

You might own the property. However it's the bank who is going to lend you the money. They therefore set the rules. Including affordability checks etc.

Best to be honest about the reasons. £80k is not an insignificant sum. The obvious conclusion to be drawn from vague justification is that you are failing to disclose something.

ACG

Most lenders have a requirement of anything legal.
So buying a consignment of cocaine or arms is probably not going to go down too well.... Hopefully that helps you to see why they need a reason even if it is a little extreme.

With anything like this, you just need to be honest and then the broker can find a lender that suits. You cant just lie in order to get a Mortgage, that is Mortgage fraud which can have lasting implications for you and the broker if found out. Honesty is the best policy and all that, then you are not stressing about coming unstuck through till completion.