Equity release for second home

junglist_matty

Is it possible to take a second mortgage out on our main house and use the released cash to buy a small "cheap" second home "in cash"? The property in question is a non standard construction so can't get a mortgage on it.

Releasing enough equity from our main home will keep our borrowing well under 50% of the house value.

subjecttocontract

If it's non standard construction you will have a problem when selling it !

Green_hopeful

If you want to borrow more on the existing property it is possible but please don’t go for one of the equity release companies and just get a normal mortgage if you can. Equity release is a dreadful idea. 

eddddy

junglist_matty said:

Is it possible to take a second mortgage out on our main house and use the released cash to buy a small "cheap" second home "in cash"? The property in question is a non standard construction so can't get a mortgage on it.

Releasing enough equity from our main home will keep our borrowing well under 50% of the house value.

Rather than take out a second mortgage on your main home - it's probably better (cheaper) to remortgage your main home instead.

i.e. Pay off the current mortgage  on your main home, and replace it with a new one for a larger amount than you have at present.

That will probably be cheaper than a "second home mortgage" as well.

You always tend to get the cheapest deal on a mortgage on your main home.

fatbelly

Good advice above. We did just that some years ago and never regretted it

peterhjohnson

You can use the cash from Equity Release for anything so yes, it's possible. It may not be the best/cheapest way of borrowing money

peterhjohnson

Green_hopeful said:

. Equity release is a dreadful idea. 

Many years ago, ER was almost always a dreadful idea. Nowadays it's changed and been regulated so for some people, it can be quite a good idea

user1977

I think the OP is just talking about "releasing equity" in the general sense of taking a further advance secured against the property, not actually an "equity release" (i.e. interest rolled up until the eventual sale) product

Veteransaver

It's this second property a "lodge" type home on a park? Be very wary if so. They are generally trouble in the same way that park homes/caravans are, eg few rights re lease fees / site management, and they cost significantly more to buy in the first place.

junglist_matty

Our current mortgage is 2years into a 5year fix at 1.04% so no chance of ending this deal early! So it would have to be an additional mortgage on our current home to release cash.

The house in question is on a "post WW2 tin town estate" in Northern Ireland (see https://www.bbc.co.uk/news/uk-northern-ireland-29254528). It's 'cheap" and is freehold, there's no service charges, park fees etc ...a lot of people "build around" their tin houses to modernise and improve efficiency... It's in a small estate where our extended family own 4x of the 20x houses. Buying purely as a base for visiting family during school holidays, weekends, special occasions etc. At the minute we have to rent an Airbnb which puts us off visiting so often. Looking for a home from home and our family can use it when we are not there.

subjecttocontract

It sounds like a very poor investment. Non standard construction , not able to raise a mortgage, requires lots of money to improve it, difficult to sell to anyone other than a cash buyer. Are there no alternative properties available ? Think I'd consider sticking with Airbnb.