Posted on 3 February 2010 by christine wright
Hi, my partner owns his house outright and is valued at about £290,000. We wish to purchase a larger house and wondered if there is any way we could release equity in order to pay for a new property currently on the market for £220,000. My partner is self employed and his gross earnings are roughly £28,000 per annum. Any ideas?
It is possible to release the equity in the existing property and you have a choice of ways to do this.
If the intention is to sell your partners property, then you can arrange what is known as bridging finance. This is a short term loan secured on the existing property, which literally bridges the gap between the purchase of a new property and the sale of the existing one. Due to it's short term nature and because the amount borrowed often bears no relation to your income, the interest rate and fees on this type of loan can be quite high.
As an alternative to this, you may wish to consider keeping the existing property and renting it out. Depending on the anticipated rental income, you partners personal circumstances and the value of the property, you could then arrange a buy to let mortgage on it and use the funds to purchase the new property.
I suggest that you seek independent mortgage advice about your situation as soon as possible.
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