Remortgage to invest the money

frithemajik999

Hi

Hadn’t really appreciated until now how picky banks can be / nosey they can be if you want to borrow more money on a remortgage. We have an LTV of around 50% and are borrowing well under what our income/expenditure would allow (borrowing more shouldn’t be an issue on that front and so thought we’d be fine).

I wondered whether you can borrow more on your mortgage to invest it though, have done some reading and it looks a bit of a grey area. Appreciate you generally can’t borrow for commercial uses, but I’d be investing for personal benefit? Seems a bit daft that I could just say I want a new bathroom, kitchen, and car and get more money but may not be able to borrow to invest?

Any thoughts/experiences welcome...

SonOf

I wondered whether you can borrow more on your mortgage to invest it though,

yes you can.

have done some reading and it looks a bit of a grey area.

its not grey. You can do it.

Appreciate you generally can’t borrow for commercial uses,

The self employed or partnerships can. Limited companies would defeat the purpose.

Any thoughts/experiences welcome...

You havent said what you would be investing in. It can make a big difference.

For example, borrowing to invest in property is routine and quite normal.
Whereas borrowing to invest on the stockmarket is a stupid idea most of the time.

pjcox2005

My understanding is that it's very difficult for that reason. What you can do is get 0% credit cards, spend on those rather than a debit so you have the cash to invest. Then remortgage with the intention to clear debt as that's a well trodden path and regularly accepted I believe.

Thrugelmir

Lending in general has to be undertaken in a responsible manner these days. Hence the questions.

Leveraging with debt is doubled edged. Capital losses can be as magnified as gains are.

Why not simply save your excess income as tax efficiently as possible every month?

frithemajik999

Thanks for all the responses thus far. I’d be investing in a platform I’ve been investing in for nearly 12 months. Appreciate it is risky (hence I’m averaging 5-10% returns a month, appreciate you definitely can’t get that without risk) but it’s all well within my affordability and the platform is in an area of expertise for me so I’m as comfortable as I can get. Taking LTV from 50% to say 70% for someone in early 30s doesn’t feel stretching hence we’re considering it.

It just worries me that the bank will ask lots of questions about what I’m investing in, won’t understand it, will view it as high risk and won’t lend. Or will they accept 70% isn’t racey and we can afford the increase in monthly interest / repayment comfortably and it’ll all be fine?

Re remortgaging on residential mortgage for commercial reasons, I know someone that was wanting to use the funds to refurbish some holiday cottages they planned to let and they were not allowed to?

billy2shots

I very much doubt you are getting 5-10% returns a month.

You might want to check that again.

ec9wrr

Investing in the stock market is stupid?!

https://www.fool.co.uk/investing/2019/09/07/why-a-stocks-and-shares-isa-beats-buy-to-let-every-time-2/

SonOf

ec9wrr wrote: »

Investing in the stock market is stupid?!

https://www.fool.co.uk/investing/2019/09/07/why-a-stocks-and-shares-isa-beats-buy-to-let-every-time-2/

Who said investing in the stockmarket is stupid?

And that Fool headline is actually stupid. You can have over 30,000 options in an S&S ISA and some of those options will not beat buy to let. an S&S ISA is a tax wrapper. Not an investment. So, that headline is stupid. But then again, it is Motley Fool. So, we should expect that.

frithemajik999

billy2shots wrote: »

I very much doubt you are getting 5-10% returns a month.

You might want to check that again.

I am, thanks for your input. Wasn’t what my post was about though.

MaxiRobriguez

I don't think remortgaging to invest in the stock market is that dumb, as long as:
1) The investment is for a long time
2) The remortgaged terms are affordable for the long run.

Mortgages are about what 2% interest at the moment? If this person had extended their mortgage two years ago and put the money in the stock market they'd have made 10-20% returns dependent on the investments chosen.

People take money out to do their bathroom, what's the difference?

That being said, I would caution the OP of this approach at the moment given equity and bond prices look quite stretched so the risk of a downturn looks elevated. One of my other rules is not to have any leverage in stocks at the end of a business/credit cycle...

benbay001

SonOf - are you suggesting investing in the stock market is fine, but as soon as you introduce leverage its stupid?
But using leverage to buy BTL is somehow much safer?
Im sure there are more people upside down in property than there are people upside down in index funds.