equity release

[villa 1]

H Folks.
Has anyone views on releasing equity on properties to finance the buying of a new family home? Both myself and my partner have houses (one rental and the other for sale, which is very hard to sell ) at the moment and would love to sell them both but due to the current climate it seems that we may have to put both properties up for rent. We are not too keen on this method of finance but is there any other way?
I know that we are in a fortunate position both having our own properties but it's very frustrating trying to sette down and buy our own family home

 

[dermo033]

may be try and go interest only on both and put the rest towards your mortgage on the new house, whats the potential equity you could release? rental potential of both?

 

[tiger]

I would say you approach should depend on how secure are your jobs/income (will there be a drop to one income only), and how optimisitic/pessimistic are you about the property market and economy in general.
Assuming a bad (but realistic?) scenario, I would not like to be in the position of paying for 3 mortgages and not getting any rent from the other 2.

 

[villa 1]

We both have public service jobs and we would hope to pay both mortgages on both of our properties if we rented both with a few bob left to pay the taxman and the probable property tax that's coming our way. Ideally we would like to sell the two properties, clear the existing mortgages and start fresh but that's only a runner if we're prepared to give our houses away!!
Maybe we should have a change of tact and put on rental/investor hats. Not our preferred route
The cost of the new house is approx 350,000

 

[z109]

Make sure you work out your figures with no interest allowance on the rental properties, as it was reduced in the last budget and may be reduced further.

Make sure you can afford the new house with no mortgage interest relief for the same reason.

As it is, if you do equity release on them, you will only be entitled to claim the interest on the portion that was already mortgaged, not on the equity release bit aswell.

Whereabouts are the properties? What're the local rental markets like? Have you told the banks you are renting out the first property? (Commercial mortgage rates apply to residental investments - they are higher than residential rates). Have you factored in insurance and maintenance?

 

[Senna]

if we're prepared to give our houses away!!

It may seem like giving them away at today's prices compared to 2006 prices, but the 2006 prices may never be reached in real values again but will be reached in nominal values.
If you can sell the 2 houses now and make a profit on them, it would be the wisest choice, becoming landlords of two house will just bring more stress especially seen its not really your first choice.
Although you do have two PS jobs, circumstances can change and if you are buying another house, you are open to a large exposure to property related liabilities.
The rental market is oversupplied at the moment (in most areas), but i can only see this getting worse, a huge amount of sellers (and developers) are opting for renting, but there is only a limited supply of tenants, especially with so many non-nationals returning home now that the jobs have dried up.
Cut and run if you can.

 

[tiger]

Cut and run if you can.

+1
If by "giving them away" you're still selling at a profit, then definitely cut and run.
Equity release = Increased borrowing.
There is no pot of gold under the house magically generating money!

 

[ajapale]

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