Can I release equity in the home I’m selling to prevent my chain from falling through?

Posted on 21 June 2016

"I have found a property which I'd like to purchase as a main home asap (worth £415,000) (I have a Mortgage in Principle). I currently live in a property which I own (worth £325,000)with a mortgage of £162,000). I am awaiting the sale of an empty (usually rented) property (worth £170,000 with a mortgage of £100,000). I am expecting the latter to sell in a few weeks (but no guarantees!) So that I do not lose the home I'd like to buy, can I release equity on the property I currently live in, to pay a deposit/stamp duty/ fees on the new main home? Are there lenders who would consider this? What would be the fees, taxes, tie-ins? Once I move, I intend to keep the current property I live in and expect a rental income of approximately £1100 per month."

From the brief details you have supplied this looks like a feasible deal. The equity in your current property gives you some options, and I can't imagine that the rent likely to be achieved would cause any issues as there are lenders available who can take personal income into consideration, if there is a shortfall on the rental income achieved against the loan required.

I can't say exactly how much we could get you on your new mortgage as I need full details of financial commitments and outgoings, but with your income of £115,000 I would be hopeful it should allow you to make the move you are looking to make. From the information you've supplied, I can't see why you shouldn't be able to do a let to buy. Most buy to let lenders will allow you to capital raise up to 75% of the value of your current home, subject to the proposed rental income likely to be generated. You can then use the funds raised to provide the deposit monies for your new home and then take out a new residential mortgage for the balance.

You are also wanting to sell an existing buy to let property, which suggests you might be an experienced landlord which will be taken into account when accessing the new mortgage. Lenders do typically like the completion of your new home, and the tenants moving in to be simultaneous, however there are others who can be a little more flexible as long as you can demonstrate that you can cover both mortgages, until the tenants move in.

I suggest that the next step would be to discuss your enquiry in more detail, if you would like to do this then please let me know and I'll arrange for one of our consultants to contact you. Please inform the consultant that you already have a mortgage in principle and provide details of the loan agreed and product rate for the mortgage.

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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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