Can we use the equity in our current home to buy a new one?
Posted on 7 May 2013 by Gareth
We have a property valued at £850k with a £425k mortgage. The current rental value of our property is circa £3750pm. How would we go about letting out our property whilst releasing capital in the property to buy a new home?. Or rather than buy a second property if we rented one what happens to the capital in our existing property - could it be released. Joint income of circa £90k.
Based on the initial infromation you've supplied here, then on the face of it I think this should be something you can do.
Under a 'Let to Buy', using your existing property, and subject to confirmation of the rental income of £3,750 you can typically capital raise upto 75% of the value, which after settling the original £425,000 would release £212,500 to be used as the deposit for the new property. Most Buy To let lenders will cap the LTV at 75%, though there a few who will go slightly higher.
Obviously we would need to know the fuller picture around your financial situation but it looks 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.
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