Can You Remortgage To Buy Another Property?
Remortgaging can be a great way to release equity. But can you use this equity to purchase another property? We’re revealing all in this short guide.
The short answer is yes, you can remortgage to buy another property. But, as you can probably guess, this can present quite the juggling act if you’re footing the bill for two mortgages each month. This is why remortgaging to buy another property is not the most common reason you will see people refinancing. For starters, lenders will be more stringent on those looking to secure a second mortgage to ensure that they are trustworthy with their finances and don’t pose too great a risk.
Can I remortgage to purchase another property?
The amount of equity you have will be an important deciding factor in whether or not you will be able to remortgage to buy another property.
If your equity outweighs the debt, you may be able to use it to help secure a deposit for another mortgage. Your equity is calculated by subtracting your outstanding mortgage debt from the current value of your property and assets.
It’s worth speaking to a mortgage advisor who can help you calculate the likelihood of being able to remortgage to purchase a second home. They will also be able to help calculate how much you could reasonably expect to afford or how much equity you would need to make a purchase of a certain value.
Other factors that will be taken into consideration are your income, credit score and savings – the same criteria that will have applied when securing your first mortgage. If you’re buying property with the intention to let out to tenants, this may be seen favourably as your home should bring in extra income.
Best practices to secure a remortgage to buy another property?
Getting a decent remortgage on your first property should enable you to free up some money to afford another mortgage, or could even replace your original mortgage if you’re able to pay off your first one.
Before approaching any lenders, it could be worth contacting a mortgage advisor to help get your finances in order. They will be able to offer helpful tips to boost your chances of being accepted.
You should Inform your mortgage advisor of the reason for your second home purchase. Common instances for purchasing a second home include becoming a landlord, buying a holiday home, or purchasing property for commercial use.
Speak to Agentis today. We can help ensure you have the best chances of securing a second property through a remortgage. As ‘Whole of Market’ remortgage advisors, we can help get you the best deal which can save you money in the long-term. Contact us today to arrange your free initial consultation.
*You may have to pay an early repayment charge to your existing lender if you remortgage.
