July 10th, 2014.
Equity Release: How to Get Money Out of Your Property
Being a property investor is excellent for building up equity, although it can mean that you aren’t very cash rich. Many new investors mistake this cash flow for something negative, as they aren’t sure how to release the equity from their property.
There are many reasons why you might want to release equity from your property, including putting down a deposit on a new investment or carrying out any property developments. Here’s how to get the most out of your property:
Equity Release Schemes
There are specialist schemes out there which are designed to enable the home owner to take cash out of the equity built up in the property. Generally these schemes are aimed at older homeowners or property investors who need to access the funds that are tied up in their property. How much you are able to borrow against your home depends on a number of factors, but using a commercial finance broker will ensure you get the best deals.
Arguably the most popular avenue of equity release for property investors is remortgaging. This scheme allows you to take some of the equity out of your current property and invest it in another area, such as putting it down for a deposit on another house or using it to fund a development. In doing this, it is very easy to expand your portfolio without having to save for years to build up a large enough deposit.
Taking this route will mean that you need to get the property you wish to remortgage valued in order to find out just how much equity you can get out of the building. You will probably have to pay a fee for this valuation and the amount tends to be conservative as they need to ensure they can recoup their losses if you default on the loan.
With equity release, you often have to own the property outright before you are able to retrieve any of the equity that has been built up inside it. There are other alternatives, such as asking your lender for an advance on your existing mortgage or taking out development finance for either building new properties or renovating existing buildings.
Depending on who the lender is, they may accept property as a deposit based on a valuation and therefore not requiring you to go through the arduous process of freeing up equity.
At Pure Commercial Finance, we think outside the box to find the best solution for your needs, so if you need to discuss equity release as an option, get in touch with us today.