Castle Trust announced people over the age of 55 living in the capital could take advantage of their current home and purchase a second country home. The company further stated all it takes is 20 per cent of the current home’s equity to make this secondary purchase happen. Through an equity release scheme like a lifetime mortgage, housing owners in London could find a second home in numerous areas in the country. To determine if you would qualify and how much equity can be released, use an equity calculator UK and find out how much equity you have and learn about all your lifetime mortgage options.
Falling Slightly Short on the Purchase Price
It is no secret that those who live in the Capital have amassed some great wealth over the years. It has allowed them to purchase homes with an average value of £1,149,200. It also means that many of these homeowners also have enough funds to buy a second home or come close to it. If a homeowner does fall slightly short of the total purchase price, there are always equity release solutions in London.
A lifetime mortgage allows a homeowner to take equity out of their home withor withouout monthly repayments. The loan does not have to be repaid until the end of their life or they decide to sell the property the mortgage is on. With untapped equity at Londoners’ fingertips, it makes sense that gaining a second home is a consideration.
Given that homeowners might have nearly the entire purchase price of the second home and would need perhaps 20 per cent of their current home equity to finish the deal, it is more than possible to take advantage of the current housing market.
One provider asks for the home buyer to have 40 per cent of their main home equity available. This company further stated that anyone in Kensington and Chelsea areas could buy a home in 103 of the 111 counties/local authorities in England and Wales. Those living in Westminster could purchase homes in 73 of the counties and anyone in the Camden area could afford prices in 49 counties/local authorities.
Second Home Lifetime Mortgages
A select few of the lifetime mortgage providers will allow equity releases on a second home rather than the main home. It is highly possible for city dwellers in the Big Smoke to purchase a second property by leaving the equity alone in their main home and taking advantage of a lifetime mortgage on their country home. It works by considering the loan to value. As long as the loan to value is under 40 per cent of the home and nearer to that same 20 per cent mark stated by Castle Trust the second home could carry the lifetime mortgage.
Advantages of Equity Release on the Second Home
It is no secret that lifetime mortgages have disadvantages. The major problem is if the roll-up of interest is selected, rather than repaying it. The interest tied into the loan accrues until repayment is made. If the loan is taken out for £25,000 and the interest is 6 per cent, then over 20 years the loan could more than quadruple. Check with an equity calculator UK to determine affordability and examine different scenarios. The point is that if the second home is owned for 20 years without paying any interest off and making no repayments, the loan could become expensive.
By leaving the main home free of any equity release or mortgage, the second home could pay for the mortgage, provide a lot of fun holidays for the married couple, their family, or just for a single person with two homes. At the end the home equity release sale of the second property, the estate pays for the mortgage it had on it leaving the inheritance of the other property alone.
Application Qualifications
• Age must be over 55 to qualify for a lifetime mortgage
• The minimum property value is £70,000
• The home has to have a usable LTV (loan to value)
• The property must be of standard construction and almost mortgage free
If these parameters are met it is a simple matter of shopping around to find a product that best fits your London housing needs. You could even take a little more out in the lifetime mortgage to make home improvements if the LTV supports it. In the end you have two estates that will give your beneficiaries inheritance whether you use the first or second home for the lifetime loan.
Housing prices are on the rise and they support Londoners branching out into the country for that holiday home. It is important to speak with a London equity release adviser regarding the specifics and current products. They can also help you with the equity calculator UK results and provide independent equity release advice needed to make the right decision for you & the family.