Equity Release from Property

uknowme

Hello, I was hoping for some advise on how to go about this...
I have a property valued at around £650k (I am the sole owner) with about £30k left with the mortgage lender and two secured loans totalling £25k which have a charge on the property.
* I need to pay £285k to buy out my siblings share (not legally bound but being fair and all)
* I need to raise another £40k to repair and extend part of the property to make into two flats. So one half can help me with my mortgage and the other I can live in.
The Question is... How can I release the equity from my property to do the above without having to sell the house?
An old broker I knew suggested taking some sort of secured loan with a slightly higher interest rate which will pay off all of the above leaving me with one payment to make every month but not sure how bad that  will be or if it can be fixed rate.

Any advise or suggestions will be appreciated. Thanks

MWT

How old are you and what is your annual income (roughly)?

You have a lot of complexities in there due to wanting to make significant alterations to the property and then let one of the flats you have created so whatever the outcome you are going to need a broker, but the age and income answers will quickly show if there is even a possibility of a viable route...

dunstonh

Equity release typically is aimed at 60+ but there are some providers that will go into the 50s.
So, how old are you?
If too young, then rather than equity release, you would be looking at the possibility for a secured loan/further advance.

MWT

Highly unlikely that the typical 'Equity Release' products are going to be appropriate just based on the amount required to be released and the intended purpose... ... but more details will clear that up for sure.

CSL0183

£650k property with a £55k debt, leaves £595k. You then want to borrow £325k from the house so all in all you need £380k for everything. (£325k + £55k)

Borrowing £380k against a house at £650k would leave you with equity of £270k so your LTV would dip in below the 60% LTV band which would mean you should secure the best rates. 

I guess it then comes down to whether you can afford a £380k mortgage? More difficult if you are single, you would have to be earning in excess of £100k pa and be young enough to take on a large mortgage over a long term?

dimbo61

Maybe time to review your options.
Would selling be a better plan ?
Somewhere smaller and cheaper you could buy outright with the cash from your half of the sale of the property ?

MWT

CSL0183 said:

I guess it then comes down to whether you can afford a £380k mortgage? More difficult if you are single, you would have to be earning in excess of £100k pa and be young enough to take on a large mortgage over a long term?

... and don't forget the plan to create two flats out of the property and rent one to help with the mortgage costs...

This is not looking much like a standard residential mortgage proposal...

uknowme

MWT said:

How old are you and what is your annual income (roughly)?

You have a lot of complexities in there due to wanting to make significant alterations to the property and then let one of the flats you have created so whatever the outcome you are going to need a broker, but the age and income answers will quickly show if there is even a possibility of a viable route...

I am 42 years old and earn £35,800 but get an additional £2,500 for on call duties (not sure if that would be taken into account). We do not occupy most of the rooms therefore it makes sense that I rent out. I might consider a lodger but prefer having a flat for the privacy

uknowme

MWT said:

Highly unlikely that the typical 'Equity Release' products are going to be appropriate just based on the amount required to be released and the intended purpose... ... but more details will clear that up for sure.

Sorry I wasn't sure what I needed either I was guessing it would be an equity release. I do not wish to sell the house if I can help it.

uknowme

CSL0183 said:

£650k property with a £55k debt, leaves £595k. You then want to borrow £325k from the house so all in all you need £380k for everything. (£325k + £55k)

Borrowing £380k against a house at £650k would leave you with equity of £270k so your LTV would dip in below the 60% LTV band which would mean you should secure the best rates. 

I guess it then comes down to whether you can afford a £380k mortgage? More difficult if you are single, you would have to be earning in excess of £100k pa and be young enough to take on a large mortgage over a long term?

Hi, Thanks for the detailed breakdown, so basically yes that's what I need for the clean slate. I have partner but she is a housewife. So income on that end but I was thinking about adding the rental income from the flat. Would that work?

uknowme

dimbo61 said:

Maybe time to review your options.
Would selling be a better plan ?
Somewhere smaller and cheaper you could buy outright with the cash from your half of the sale of the property ?

Hi, Yes that would be the last option, ideally it's central to all our needs. It just wouldn't be a good time to pickup and move somewhere now. But we have it as an option. Thanks