Can I Release Equity To Buy A Second Property?

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Over the years, many of us Brits have taken the plunge into property investments and owning multiple properties. With many of us considering, is there a way of releasing equity so you can start investing in property?

Releasing Equity

In a nutshell, if you didn’t already know, releasing equity is a way of unlocking money on the value of your property. This can be done in multiple ways if you are above the age of 55 and you don’t have to have your mortgage fully paid.

Could I remortgage to buy another property?

This is one of the most common ways selected to invest in property. Usually people remortgage to invest in a second home or buy to let. Depending on the purpose of the funds will depend on your options. There are a few scenarios to choose from when you remortgage and buy a second property:

  • Let To Buy – this is when you let out your current residence and buy another property top live in
  • Investing in Buy To Let – those that do this live in their current home and purchase a second to rent to tenants
  • Holiday Let – where a property is purchased and rented on short term basis to holiday makers
  • Buying a Holiday/Second home – this property is purchased to use additionally to your current property
  • Remortgaging to purchase a commercial property – this is buying a property that could be used as a office, cafe, shop, etc.
  • Remortgaging a commercial property – this could be a commercial property you already own and you refinance to purchase another

What needs to be thought about when remortgaging?

Everyone’s circumstances are different and there are always factors to think about before they impact on how much you are able to borrow. This could include:

  • Affordability
  • Equity
  • Credit History
  • Personal Circumstances
  • Property Types

These are just some factors that need to be thought about before jumping in with both feet first.

If you decide that you want to buy a second home and need to remortgage, you need to look at the equity of your current home.

How much equity do I need to remortgage?

It can be slightly confusing working out the equity on your property. But, there is a calculation you can use to work out how much equity you may need to purchase a second home.

To do so, take the level of equity your property has (this is equal to the valuation of your home), then minus this against the current balance of your mortgage. This shows how much you may access when remortgaging.

A factor that will determine whether a mortgage lender will be able to provide a loan is the loan to value; also known as LTV. This is the balance of your mortgage that is secured by your current property formed as a percentage of the value of your home.

If you do decide to remortgage and purchase a new property, then there will be lenders able to help you. A lot of lenders will be able to give you up to 95% of the value depending on your creditworthiness.

Jess Mitchell

I started writing for PPO back in August 2019. I particularly enjoy writing about new housing developments and upcoming property events.

About Sophia 68 Articles
I started writing for PPO back in August 2019. I particularly enjoy writing about new housing developments and upcoming property events.

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