Equity Release

kacee

Hi,

We currnetly have £25,000 left to pay on our mortgage, 17 years left to run. Our property is valued at £250,000.

We are looking to purchase a holiday lodge at £150,000. We can put down £75,000 in savings.

So we require about £75 in equity.

Any opinions on what could be the best option.

Leon_W

"Holiday Lodge" ?

Are we talking something which (by planning) is only allowed for holiday use or of unusual construction (wood) ?

EdInvestor

The "usual system" is called "mortgage equity withdrawal" (MEW) in which you increase the mortgage on the main home and use the cash withdrawn to fund the purchase of the second one outright..

That's assuming your salaries/ages/credit profile will take the strain of the bigger mortgage.


It's also wise to consider an exit strategy if necessary: would you have to take a loss if the second property need to be sold fairly quickly?Many people who brought abroad are getting caught right now in this trap.

dimbo61

£150,000 would pay for alot of very nice holidays ,cruises,motorhome hire,
canal boat hire, round the world holidays etc
Why spend it on a "holiday lodge " overlooking a lake in england ?
keep your money in the bank and enjoy several trips abroad each year
there is a whole world out there to see so go hire a big motorhome
for 2 weeks at £1,000/1,200 and see if you enjoy that first !

kacee

Leon_W wrote: »

"Holiday Lodge" ?

Are we talking something which (by planning) is only allowed for holiday use or of unusual construction (wood) ?

It is a Wood Construction, it could be used 12 months a year. It is within a conservation zone, so the value would increase over time. I am only mid 30's with a good income, partner is the same.

kacee

dimbo61 wrote: »

£150,000 would pay for alot of very nice holidays ,cruises,motorhome hire,
canal boat hire, round the world holidays etc
Why spend it on a "holiday lodge " overlooking a lake in england ?
keep your money in the bank and enjoy several trips abroad each year
there is a whole world out there to see so go hire a big motorhome
for 2 weeks at £1,000/1,200 and see if you enjoy that first !

Cheers, I have spent the last 15 years travelling a lot, this is not to say we would not travel in the future, but for the time the rugrats are growing up this is what we want to do.

UK007BullDog

Remortgage or ask for extra borrowing on your main property. If your income allows.

daveyjp

O/T If you have £75,000 in saving why have you got a mortgage?

Secondly - on what basis will the lodge be held? Very few are freehold, most are on relatively short leases which means you are buying a depreciating asset and you will have a ground rent and service charges to pay every year.

If you haven't done so take advice from a suitably qualified professional on whether it will actually increase in value.

Longevity is also an issue as lodges aren't built to last for centuries. After 30 years many require extensive work to upgrade them and some are only good for the fire.

If I had £150,000 to spend on a holiday home I would be looking for freehold bricks and mortar.