Posted on 28 April 2012 by Richard
Hi, we have a large amount of equity in our house and wonder whether we would be allowed to increase that mortgage and use the money to help buy another property to rent out. We would need to go from our current £65k mortgage (with about 10 years to go and I am only 41) to a £150K mortgage but the house is easily worth £250K. I have also been self-employed for 16 months. Would we have to tell our current mortgage provider what we want the money for?
This is a very common way for people to raise the deposit required for an investment purchase, especially when it is their first venture into the world of Buy to Lets.
Do you need to tell your current lender what you want the money for? Why wouldn't you? Advising them it is for something else would be mortgage fraud and although it may mean that they either restrict the amount your can borrow or decline your application, you can always look to remortgage to another lender who will lend you the money. If you lie on the application form and they find out, you could find yourself unable to get any credit due to a Credit Industry Fraud Avoidance (CIFAS) note being placed on your credit file.
I recommend that you take independent tax advise before you arrange the funding for your purchase and speak to an independent mortgage broker who can compare what your current mortgage lender can offer with the rest of the market. I believe we can help you, please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you further.
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