Banks aren’t always the friendliest of places when it comes to borrowing money. All the “hoops” they expect you jump through, and even then you’ll be told what you can or cannot use the cash for! So it’s good know that you may have more options than you think. Let’s give you a working example:
John, age 63, has his main residence with an outstanding interest only mortgage of £40,000 which is due for repayment later this year. He has a holiday home (mortgage free) in Cumbria that is used exclusively by him and his family, and he also has four “buy-to-let” properties (mortgage free) dotted throughout the town, and all producing good rents.
John wants to raise cash for various purposes including clearing his mortgage , plus money to help buy another new buy-to-let property, as well as paying for the world cruise he promised his wife 10 years ago! His bank is not being very helpful, so he has an interesting chat with one of our equity release experts.
It transpires that John could in fact use equity release to get cash from his main property and/or his holiday home, and/or his buy-to-lets, or any combination of the three. The cash released can be used for whatever purpose he likes, although the existing mortgage would have to be cleared, but that was part of his plans anyway.
Knowing his debt will increase was at first a concern, but John sees this as a reasonable compromise because equity release means no monthly repayments and so no impact on his income situation. In fact his disposable income will increase as his existing mortgage will be gone.
John is pleased to learn that the interest rate on the equity release loans would be fixed and guaranteed for life. He is told that these type of loans are also portable. This gives him the possibility to be able to move a loan to another property should he need to sell at any time without having to pay off the mortgage if he chooses not to.
Another benefit is the possibility of setting the interest against rental payments for tax purposes, although he knows this will depend on how the cash is used. So tax relief on the cruise is out of the question! Or is it? See this page about Landlord Tax.
John is now arranging a sit-down meeting at home with one of our fully qualified Beauwater financial advisers. John will be presented with written facts, figures and all the pros as well as the cons. John thinks: “That’s something else I never got from the bank … a home visit!”
Initial consultations are free so please feel free to get in touch and I will happily refer you to the most appropriate member of our team. We operate Nationally.