Although you may not have the cash saved up to put down a deposit on a second home, there are other ways you can still achieve this dream. Remortgaging is a path some people take in order to buy another property. First, it’s best to know how this works.
With each monthly repayment you make on your mortgage, you are gradually taking off more and more capital of your mortgage. During this process, the equity in your home is increasing. When this happens you can remortgage and release some of the equity to use it towards other things, such as buying another property, home improvements. This is a common choice for majority of those looking to get into the buy-to-let market. The equity built up can be put towards a deposit on a second property. Using equity to buy another property is 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 giving you their recommendations on how you can achieve your goal.
Releasing equity in property means that your repayments would be a lot larger than they have previously been. Your mortgage adviser will go through affordability checks with you when you remortgage. You still have to show that you can afford to pay the higher repayments on your current income. If you are unable to meet these payments it could result in the loss of both properties, so it’s important that you are honest with your mortgage adviser.
If you are freelancer, contractor or self-employed, you may be worried about going through the process of remortgage. Your mortgage adviser will again be able to offer their advice when it comes to your remortgage. They will take into account your whole situation and clearly go through all options so you are able to make an informed decision that suits you. Can I remortgage my home to buy another property?