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Using equity within your current home to raise finance for buy to let


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Hello I am brand-new to this group and two or three people have told me to join !!  ... so far i have been on rather bland Facebook groups where you post your life story and get two responses or a random wave  and end up with nothing apart from people trying to sell you nonsense and seminar places with no advice.

I listened  to a couple of the podcast that were very detailed thanks. Very good - but i have a very specific challenge.

I am wondering - I have a fairly respectable amount of equity in my current home. unfortunately I don’t have the liquid cash I need to raise the other half to do my first buy to let.

In addition I have almost sold my house - I haven’t signed the contract - but i could sell and just pull all of the equity and use it all for buy to let and start a business while in rental accommodation.

But that would seem futile because why would I want to rent when the monthly income from buy to lets would only be used to pay to rent my main house - when perhaps  I can keep my current house and original mortgage and use the new remortgage equity from the house as leverage to get buy to let mortgages -  so basic question is-

I have about 50% equity sitting in my house- don’t have any cash. I want to remortgage the house to take out enough money to use as several individual 25 percent deposits to then further apply for several  buy to lets mortgages- I have worked out here that roughly every £50,000 that I raise can be used to purchase a property  and generate sound yields and therefore they would generate cash to not only pay for the original loan on my house but also the second loan plus healthy profit
 

can this be done-  is it advisable? 
 

so to sum up can I remortgage the house on a interest only loan and use this total sum to split as deposits for other mortgages? If so then I’m in business! I’m due to speak to my financial broker tomorrow from John charcoal - but before thus - perhaps and maybe there are other specialist people there they could advise me. So here i am!
 

my problem is purely financial I’ve worked out exactly the houses where they should be what area I wish to specialise in , what size etc for years - and researched rents etc the only hurdle I have is finding clever ways of raising the money through equity within the house to generate further mortgages

 I thought I would try this forum thank you in advance for your help I’ve heard this is a great community

Angus

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Welcome, *waves* let me tell you about a seminar im putting on. 🤣

13 hours ago, angus said:

i could sell and just pull all of the equity and use it all for buy to let and start a business while in rental accommodation.

You could do that but it will reduce the amount of Buy-to-Let Lenders available to you. They prefer to offer finance to Homeowners, as it gives them more security. If you are renting it will reduce the amount of lenders therefore mortgage products that are available to you.

It remains an option though, just a FYI.

13 hours ago, angus said:

I have about 50% equity sitting in my house- don’t have any cash. I want to remortgage the house to take out enough money to use as several individual 25 percent deposits

Yes it is possible. You can release equity from your home to use for "any legal purpose". If that is to re-invest into Buy-to-Lets then you can do that.

Another FYI you can not go to any lender and do this. Many have restrictions on what you can do when  you release equity. Some will not permit it at all, if you are using funds to invest in Buy-to-Let. Others will only release equity when you have found a BTL Property and ready to exchange.

So you need to work with your mortgage adviser to work out the best lender for your current plan.

13 hours ago, angus said:

then further apply for several  buy to lets mortgages-

Dont go too fast, you do want to have enough savings to ensure you can pay for any rental voids. That you have monies available to make repairs, etc..

If you try and do too many, too fast. The mortgage lenders may get a bit spooked that you are running before you can walk.

Proceeding at a steady pace, ensuring you buy nice high yielding properties. Perhaps some that need some works doing so you can add value. You should be set.

13 hours ago, angus said:

I remortgage the house on a interest only loan and use this total sum to split as deposits for other mortgages?

You can remortgage your home, though highly unlikely on an Interest Only. You can do your BTL's on Interest Only but not your rental. Interest Only is only available at a very low loan-to-value and to people that have a valid repayment strategy in place. If you remortgage to a higher LTV (to release the deposits) you will find yourself locked out of the Interest Only Mortgages.

 

I hope this helps and a bit of information to go into your meeting and ask the John Charcoal rep about. If you want to talk to Buy-to-Let specialists then Bespoke Finance on 08009202001 or hello@bespokefinance.info would love to help you on your journey.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Hi Angus

There is an alternative to remortgaging your main residence. to raise cash which you might want to look at.

This is a new product which was launched last Nov so it isn't widely known about but its ideal for landlords and investors to create a fighting fund..

Its definitely something to be aware of as it is more flexible than a bridging loan or standard secured loan. The rate its not as cheap as a remortgage rate but the flexibility out weighs that for some people.

Many landlords are using it as it gives them a flexible pot of cash to dip into and secure deals or do BRRR's

Its a first, second or third charge flexible facility which gives you an overdraft type arrangement up to 75% LTV - rates from 3.95%

You only pay interest on the money you draw down and you can repay / drawdown regularly without penalty. There are no early repayments charges

Having the facility is great if you want to access cash quickly for auctions or deposits - far cheaper and more flexible than bridging

Flexible second charge on main residence

There is also a version which can be secured on BTL's - works the same way but the rates are higher

Secured overdraft for landlords

Bear in mind the loan secured on your home is a regulated mortgage so your home is at risk and you need to get advice.

Hope it helps

Steve Walker
 
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