Posted on 21 September 2011 by Paul
We want to raise additional funds to be able to make home improvements or purchase a new house, is there an easy way of doing this?
Those scenarios are incredibly different so depending which route you go down will have an affect on your needs.
The easiest way for you to do this is to approach your existing (if you still have a mortgage) Lender for a further advance. It is possible they will want to get a new valuation to make sure that your property will still offer adequate security for the increased lending and you will have to pay for this. There will also be an administration fee payable to cover the processing of your request.
If you are not in an Early Repayment charge (ERC) period then it may be worth considering remortgaging. There are plenty of deals around that offer a free valuation and free legal service. Again depending on the current value of your property you may find that the interest rate on a new mortgage is not as good as your current rate and a remortgage may not be feasible. In these circumstances it may be possible to get a secured loan from another provider and leave your existing mortgage alone.
In regards to purchasing a new home, you can in theory remortgage your current property to fund a new purchase, however this will come down to affordability. Depending on the need of the second home (if it will be a Buy to Let or second residential) will depend on the type of mortgage you will need and what lenders are likely to accept.
For those aged 55 to 95 there are more options available for equity release. One of which being a 'Lifetime' mortgage which differs from a normal mortgage because the interest charged is not paid monthly but added to the loan and only repaid on the sale of the property or you move into permanent care.
You need to be a homeowner, aged between 55 - 95, the property must be freehold or leasehold with at least 75 years remaining and be of standard construction.
Because of their specialist nature you need to take independent financial and legal advice before entering into them and also consult any potential beneficiaries of your estate so that they know what you are considering.
It is always worth talking to an independent mortgage broker about the options available to you, you can call us on 0344 346 3672 to discuss further.
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.