Capital Raising Remortgages

Acceptable reasons for rasing money on property

January is often a time when you feel impervious and Capital Raising Remortgages might be a way to dust off the New Year blues.

Capital Raising Remortgages are generally available from most Mortgage Lenders up to 75% of your property value, however some first charge Mortgage Lenders will stretch to 95% and second charge Mortgage Lenders may even go to 100%.

Careful consideration must be given before taking out Capital raising mortgages as you are putting the property at risk if you do not keep up repayments.

If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

What is a Capital Raising Remortgage?

It is a remortgage or secured loan which releases equity from your property i.e. funds between your existing mortgage (if you have one) and the property value.

For example, John has a property worth £200,000 with a £50,000 mortgage with Halifax. He wants to build an extension and needs to capital raise £100,000 to make this possible. The total borrowing will now be £150,000 on £200,000 i.e. 75% loan to value, and as such most Mortgage Lenders would consider lending to him subject to his status approval.

What can Capital Raising Remortgages be used for?

Well depending on selecting the right the Mortgage Lender the list is pretty much endless.

• Purchases.
  Capital Raising Remortgages can be used to fund purchases. For example: buy a new car, pay for a wedding; lifetime holiday; private surgery; deposit on another property; school fees etc.
• Gifts.
  Capital raising mortgages can be used to fund gifts. For example: money to be given to family to buy their own property; donations to church or charities etc.
• Divorce or separation.
  Capital raising mortgages can be used to fund divorce. For example: money to pay your ex-partner off, cover legal bills or upfront maintenance.
• Clear debt.
  Capital raising mortgages can be used to pay off debt. For example: pay off personal loans; credit cards; store cards; mail order catalogues; ccjs; defaults; payday loans; loans from friends or family; legal and tax bills.
• Investment.
  Capital raising mortgages can be used to fund investments. For example, investment into business expansion or diversification. Purchasing a property to let i.e. buy-to-let.
• Home improvements.
  Capital raising mortgages can be used to fund home improvements either on the subject property or another. This could be basic decoration up to heavy refurbishment.

What can’t Capital Raising Remortgages be used for?

Mortgage Lenders will NOT normally allow Capital Raising Remortgages for:

• The purchase of stocks and shares as it’s demined as too speculative.
• Funding business start-ups (unless you have prior industry experience).
• Repayment of gambling debts.
• For use as proceeds of crime.
• Repayment of tax bills (but there are some exceptions).

What type of properties qualifies for Capital Raising Remortgages?

Ones that are static; so houses, flats, maisonettes, bungalows, shops, surgeries, garages, care homes, guest houses, nursing homes, pubs, farm houses etc. What cannot be used as collateral for capital raising mortgages are mobile homes, caravans, barges etc.

Do you need a current mortgage to qualify for Capital raising Remortgages?

No, the property can be unencumbered and still be eligible for a Capital raising mortgages. However, you can only apply for a first charge mortgage so will be limited to a maximum of 95% loan-to-value.

Are Capital Raising Remortgages only limited to a property I live in or are they also open to buy to lets?

Buy to let capital Raising mortgages are available up to 85% loan to value. However, bear in mind the interest rates above 75% loan to value jump quite a lot so the Mortgage Lenders rental calculation may not fit.

Niche Advice can help arrange Capital Raising Remortgages on domestic or commercial properties.

Author: Payam Azadi

Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.

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