Can we raise a mortgage on our unencumbered property, to then pay cash for the new one?

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Posted on 17 May 2013


We own our current home outright - no mortgage. We want to move but think it will take a while to sell. Rather than take out a mortgage on a new property, we are thinking of mortgaging our existing property so that we can be cash buyers and in a position to move very quickly when we find a new home. We'd then just carry on paying the mortgage on the old one until we can sell it. What are the pros and cons of mortgaging the existing or the new home? We do have some savings to put towards the new home. Thanks.

Bunny,

Based on the initial infromation you've supplied here, then subject to you meeting residential lenders standard overall affordability criteria, then I think this is something you should be able to do.

Alternatively you could look to do a 'Let to Buy', using your existing property, (subject to the rental income it is likely to generate) to capital raise upto 75% of the value, which will then enable you to use the funds to buy the new property. Most Buy To Let lenders will cap the LTV at 75%, though there a few who will go slightly higher, if you wanted to explore that option.

More and more people are using Let To Buy to give them greater control over when and for how much they can sell their current property for, and also to bolster their income and even for retirement planning.

Obviously we would need to know the fuller picture around your financial situation, but it does look promising.

If you'd like to explore your alternatives further, then please let me know and I'll arrange to put you in touch with one of our consultants.

Regards,

Simon

simon.collins@johncharcol.co.uk

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