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Can I remortgage my house to buy another property?

Can I remortgage my house to buy another property?

Are you comfortably settled in your house and have been paying the mortgage now for quite some time – enough to start seeing the light at the end of the tunnel anyway? If this sounds familiar, you might now be considering what your next move could be. Does the prospect of owning a second house appeal to you? Daydreams of holiday homes, or perhaps a nice buy-to-let investment? Well, now could be the perfect time to explore your options and see if this dream could actually become a reality.

How does remortgaging work to buy another property?

Although you might not have the money saved up to put down a deposit on a second home right now, there are other ways you can still achieve this. Remortgaging is a common path many people take in order to buy a second property, but first, it’s good to understand how this works.

Equity
With every monthly repayment you make on your current mortgage, you are gradually shaving off more and more of your mortgage, and in the process, you’re building up the equity in your home. As the equity increases, you can remortgage and release some of the equity to put it towards other things, such as home improvements or, in this case, buying another property.

This is often a common choice for many looking to branch into the buy-to-let market as the equity you have can be put down as a deposit on a second property.

Using home equity to buy another house can be an effective way to use money that would otherwise sit tied up in your property. A mortgage adviser will look at your personal and financial situation before making recommendations on how you can achieve your ultimate goal.

Affordability
Releasing equity in your house to buy another one means that your repayments would be significantly larger than they have been so far. Your mortgage adviser will go through affordability checks with you when you remortgage but you’ll have to show that you can afford to pay these higher repayments on your current wage. Failure to meet these payments could result in the loss of both properties, so it’s important you’re honest and clear with your mortgage adviser.

Self-employed
If you have a different employment status i.e. contractor, freelancer etc. you might be concerned about going through the remortgage process. Your mortgage adviser will again be able to offer their expert advice when it comes to your remortgage decision. They’ll take into consideration your whole situation, including your current income, outgoings, and clearly go through all your options so you can make an informed decision that’s right for you.

To find out more about remortgaging to buy a second property give us a call on 0115 824 8333.

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