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Re-mortgaging on a property I own outright

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Re-mortgaging on a property I own outright

edited 30 November -1 at 1:00AM in Mortgages & Endowments
9 replies 25.6K views
window_cleanerwindow_cleaner Forumite
36 posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Basically I would like to borrow some money against the house that I own outright.

I believe this to be called re-mortgaging. Is that correct?

I am self-employed. The house is worth around £400k, and the amount I want to borrow is £70K.

Would I still need to show my existing income from my self-employment in any application?

Or is the crucial thing whether I can can repay the £70k over the lifetime of the mortgage?

Replies

  • herbiesjpherbiesjp Forumite
    8.5K posts
    The crucial thing is both.

    You need to be able to verify an income to support a mortgage of £70k i.e. accounts/self assessments.

    And this mortgage then needs to be affordable to you.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Hi Mate,

    You should have no problems buying this much money on a property you own. Do you live at the property or is it rented out?

    I believe this to be called re-mortgaging. Is that correct?

    I am self-employed. The house is worth around £400k, and the amount I want to borrow is £70K. Up to 25% you should get some good deals

    Would I still need to show my existing income from my self-employment in any application? you will need to proove you can repay the money, if self employed then you will need to show accounts usually for two years.

    Or is the crucial thing whether I can can repay the £70k over the lifetime of the mortgage?

    Woolwich are offering a good deal at the moment called The great escape, it is a lifetime tracker, no tie in £35 set up fees. not to sure if it is available for a new mortgage but it should be.
  • ThrugelmirThrugelmir Forumite
    72K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
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    Do you have other debts? If the loan is seem as a way of repaying these then the application may well be declined.
    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
  • Thrugelmir wrote: »
    Do you have other debts? If the loan is seen as a way of repaying these then the application may well be declined.

    No, the loan would be to buy a business or should I say the goodwill of the business, the leasehold, a few bits of kit and stock.

    The 'trouble' or difficulty I see, and this probably is not rare, is that my income now may or may not support the application for the £70K but the income/profit from the business should. At least in theory it looks like it will, going by what I know of it already.

    But if the application for a re-mortgage can only be based on current earnings, then this might make the project a little harder to get off the ground.

    I'm loathe to carry out a full-on business loan, as I believe it would only cover part of the costs of buying the business, unlike the re-mortgage which would cover the cost.
  • ThrugelmirThrugelmir Forumite
    72K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    You will need to disclose the purpose of the equity release.
    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
  • I asked about 'equity release' when I went to the bank today for an informal talk. They seemed to think that a re-mortgage was not the same as equity release. Can someone clarify please?
  • ThrugelmirThrugelmir Forumite
    72K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    Technically there's no difference. Though in terminology terms for loan products there is.

    Equity is defined as the difference between the market value of a property and any charges against it.
    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
  • No, the loan would be to buy a business or should I say the goodwill of the business, the leasehold, a few bits of kit and stock.

    The 'trouble' or difficulty I see, and this probably is not rare, is that my income now may or may not support the application for the £70K but the income/profit from the business should. At least in theory it looks like it will, going by what I know of it already.

    But if the application for a re-mortgage can only be based on current earnings, then this might make the project a little harder to get off the ground.

    I'm loathe to carry out a full-on business loan, as I believe it would only cover part of the costs of buying the business, unlike the re-mortgage which would cover the cost.

    It would be a pity to get declined for this on current income when there is good potential to make money. Assuming you are looking at branching into buying and selling WFP/general cleaning kit, a lot of the banks don't seem to realise that this is still a growth sector as more and more companies change their working methods to ensure they are complying with H & S.
    Unfortunately, as soon as you say the word "business" at the moment, a lot of the banks impose much tougher conditions if they even loan at all. However, if you are putting your house up for grabs, I imagine someone might lend if there is a current equity of £330k.
    If push came to shove, would there be any chance of downsizing and starting up with the change. Yes I know that's a lot of hassle but if you aren't overly attached to your house it may be a possibility depending on circumstances. It would also assume you can find a buyer in a tough market.
  • It is classed capital raising on mortgage free property. If you have no current mortgage at all and you or your solicitor have the title deeds. It will be classed just like a purchase where you will need to instruct a valuation (and pay for) and also solicitors fees, Although you will get Purchase/homemover rates which are normally cheaper than remortgage rates.
    Many lenders will lend for business purposes as long as your current income is suitable for lending
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