Ok so you want to raise some capital [money] by releasing some of the money stored in your home as equity.
If anything about that opening statement has confused you then you probably shouldn’t be raising capital against your home!
You may be raising capital for debt consolidation (you MUST read my earlier article here about debt consolidation if you are) or to build an extension, buy another property, car, yacht, holiday, x, y, z…
First and foremost, be careful. Most lenders will carry out an affordability check which stops you borrowing more than they think you can afford to pay back – it’s for your own good that they do this.
But if you manage to pass and get the mortgage you desire whilst secretly knowing that you can’t really afford it, the money is secured on your home so defaulting on the payments could lead to respossession. Be careful!
Assuming you’re ok with the risks and you absolutely can afford it you need to be careful for a different reason. Let’s say you’ve actually managed to find the ideal mortgage product for your needs. Well done (no really, well done. It’s not an easy task doing it yourself – read my article “The problem with price comparison sites“). The product will let you borrow, say, 85% of your properteys value. That’s not the full story. Lenders are very picky these days about what they’ll lend you money for, if you tell them something they don’t like you may blow your chances with that lender completely. What’s worse is they don’t have to tell you why they’re not going to lend to you either, it’s their money, it’s up to them. This means you could repeatedly blow your chances with subsequent lenders until either you give up, or are virtually forced into taking a deal that’s best for the lender and not what’s best for you.
Want to avoid this? Talk to us – www.mmmortgages.co.uk