Can we use the equity in our current home to help us buy a new one?
Posted on 21 May 2013 by Lydia
Can we use the equity in our flat to buy a second home? We bought our flat for £115k and put a £23k deposit down 4 years ago. The flat is now worth £130-£135k with a rental value of £750p/m. We have seen a house we'd like to buy that is £210,000 and were hoping to put a 10% deposit down using the equity from our flat and also take a bit more out to cover moving costs. Is this possible and the best option or should we just sell the flat?
Based on the initial infromation you've supplied here, I think this is something you may be able to do.
Under a 'Let to Buy', using your existing property, and subject to confirmation of the rental income of £750pcm you can typically capital raise upto 75% of the value, which after settling the original loan, will release the remainder of the funds 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, if you wanted to explore that option.
Obviously we would need to know the fuller picture around your financial situation, and at 90% LTV lenders credit scores and criteria are much stricter, 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.
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