Releasing equity and then moving house

whirrel33 · 20 January 2020 at 3:59PM

Hi All

I am lucky enough to have a considerable amount of equity on the property I purchased several years ago.

I would like to release an amount of this to purchase a second hand car to replace my work horse which has over 120k miles now.

I am also seriously considering putting my property on the market later this year to move closer to work and to accommodate our growing family.

My question, with a healthy income, no outstanding finance and a 999 credit score, would it be reckless to release some equity for the car and then move house less than 6 months later?
I do not have intentions of using my entire borrowing capacity when I move and want to preempt my current car hitting me with an unexpected repair bill...

Any thoughts/suggestions welcome

ACG · 20 January 2020 at 4:09PM

I dont think it would be reckless, sounds like you should be in a position to take 2 hits on your credit file within a 6 month period.

Might be worth looking for a mortgage (or a second charge) with no early repayment penalties though.

whirrel33 · 20 January 2020 at 7:03PM

I didn't take into account the early repayment charge if I remortgage to release the equity then pay it back soon after.
Second charges are something I hadn't heard of before so I will look into that, would it be best to approach a mortgage broker, as my initial search for 0% ERC second charges didn't return much.
My other option would be a separate personal loan that I do not have to settle once I move...
Thanks for replying!

ACG · 20 January 2020 at 8:18PM

You will probably need a broker to include second charges.

A personal loan could be a better option, but you could compare that with what a broker can get and decide which is best for you.

How much are you looking for? An unsecured loan could be a cheaper.

whirrel33 · 20 January 2020 at 9:06PM

Initially 27-30K, but I am aware that 25K tends to be the threshold between good interest rates and not so good so I can do 25K.

getmore4less · 21 January 2020 at 7:38AM

That's a lot of debt for a car.

Plenty of decent cars around for less than 1/2 that new, even cheaper second hand.

if healthy income why no savings?

if not saving how will you afford the increased debts?

Why wait 6 month to initiate the move by the time you find somewhere it could be going into winter.

What sort of numbers are you looking at, income and total debt after the move

ACG · 21 January 2020 at 9:33AM

I think at £27k it will need to be a mortgage or secured loan. I suppose I was just trying to get an idea of car value as you can get them for a lot less and a lot more. I think unsecured loans top out at around £25k.

whirrel33 · 21 January 2020 at 10:24AM

I drive alot for work.
Moving forward I will be spending more of my day driving so want to be able to enjoy it. Also customer facing so expected to be presented well.

8K savings which I have built up over last 6 months after clearing credit cards off, I consider this my emergency fund.

6 months is a worse case. I am ready to put my place on the market, estate agents on standby chomping at the bit.

Take home - £3000
Disposable income (after ALL outgoings) - £1500

The only debt post move would be the car if using an unsecured loan.
If mortgage or secured loan I could pay it back after the move, or use the freed up money from moving on;
House renovations/savings/investments.

I think keeping it under 25K and using an unsecured loan is making the most sense to me now...

3stones · 21 January 2020 at 11:25AM

With possible moving costs and a growing family ouch that is a lot to shell out on a rapidly depreciating vehicle. With such little savings I would be erring on the side of caution I understand the need but do feel their are safer options for you.

ACG · 21 January 2020 at 11:39AM

The repayments on the the unsecured loan will be higher as you can typically only do them over 5-7 years where as a mortgage would be 20-30 years? I suppose when it comes to moving though, you could clear the loan and put down a smaller deposit if affordability was an issue. Sounds like you have a few options anyway.

getmore4less · 21 January 2020 at 1:03PM

If employed and need a car for the job that should be supplied or paid for through allowances on top of salary

Are you sure you won't be subsidising your employer?

Releasing equity and then moving house

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