How can I use the equity in my property to buy second property abroad?

Pennypincher_5

Hello folks,

Could anyone give me some pointers regarding

'How I can use the equity in my property to buy second property abroad?'

For example, If I owe £50,000 on my mortgage and the property is worth £150,000, that would leave equity of £100,000.

Would I be able to approach my lender realistically and remortgage for £150,000, releasing £100,000 to spend on second property?

I hope someone can give me some advice,

Regards

Pennypincher

nrsql

Maybe not 100k but you should be able to increase depending on your financial situation.
Ask and see. Might be a time to consider switching mortgages as it will incur fees anyway.

Pennypincher_5

Thanks, any suggestion as to which lender might be a good option?

Fairdo_2

Again, as said before, would depend on your financial situation.

Depending on your income and how much you end up borrowing against the actual value of the property, different lenders would look at your circumstances in different ways.

Normally, with many lenders you can capital raise for any Legal purpose up tp 90% LTV (Loan To Value). Therefore, you may be in a position (if your income stacks up) to borrow a further £85,000 (Total borrowing £135,000).

jnd

I released some equity on my property 4 years ago (Nationwide) to raise the 20% deposit I needed to purchase a second property abroad. No problem.

Fairdo_2

As jnd said. That is the other way.

What you would need to consider in this case is whether you take a mortgage on an investment basis or as a second property.

Affordability would be a consideration.

jnd

I suppose I should have added that the mortgage to cover the 80% was taken out locally (USA) as I receive rental income from the home which helps cover the monthly mortgage payment. The Nationwide weren't interested in what I was spending the money on.

Scott

You could:

a) Remortgage. Take out an entirely new mortgage over your property for the higher amount, either with the same lender or another.

b) Apply for a Further Advance. This is basically just a second subaccount on your mortgage. Often these will be at higher rates of interest.

c) Take a second mortgage with a second company. I would say this is the least advisable of the three, as second mortgagees are often very quick to repossess when things get sticky (I've seen them move to court after a few months in some cases).

Of the three, if you're looking to take out up to 90%ish, I'd go with the Further Advance, as Fairdo has said. If you're looking for the full value of your property (bearing in mind the extra fees/worse rates for doing so) then a remortgage would be on the cards.

Conrad

Pennypincher wrote:

Hello folks,

Could anyone give me some pointers regarding

'How I can use the equity in my property to buy second property abroad?'

For example, If I owe £50,000 on my mortgage and the property is worth £150,000, that would leave equity of £100,000.

Would I be able to approach my lender realistically and remortgage for £150,000, releasing £100,000 to spend on second property?

I hope someone can give me some advice,

Regards

Pennypincher

You can remortgage up to 100% but the lender will need to satisfy themselves you can afford the debt.

Watch out for huge MIG fees charged by the likes of RBS for example.

Pennypincher_5

Thanks everyone for your valued advice

will-in-estoril

We remortgaged 2 years ago to buy a place abroad. Our lender at the time, Dunfermline BS, were a bit cautious, and stuck us on their SVR. Once the redemption period was up we switched to A&L, and didn't even need to declare our second property. Our LTV is about 40%.

Just one word of advice: if you secure your additional advance use a reputable currency broker to convert your funds to foreign currency: they will beat what banks can offer you hands down!