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Wanting to get into property and where to start

Advice please. Buy to let or renovation, or not. I'm 51, no pension, have 250k equity in my house, worth about 350k, have 90k mortgage (interest only) can draw up to 50k extra if required (poss for deposit) Earn 20k yr, no savings, no other debt..result of divorce! Can I or shall I, take the plunge to make some money for retirement, any risks I should think about? Thank You.

Asked on May 18 2012, Home Finance in Newhaven | Report content

Answers (1)

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  • I’m not quite sure how your sums add up. Are you considering selling your house to release the equity? If so, you still need somewhere to live. On a normal mortgage lenders are likely to lend 3 to 4 times your £20 income, so that will only allow you to borrow £80k max. Whilst in theory, some lenders would lend up to 70% of the value of your property (£245k) your £20k income wouldn’t support them offering a loan of that amount. A broker told me last week that there are only about 20 lenders offering Buy to Let mortgages at the moment and they want to see really good income rates on the property plus additional income as well. So these type of mortgages are pretty difficult to secure currently. If you sell the property, you would have the £250k equity to purchase something to renovate, plus you might be able to secure additional borrowing against your income. However, if a property is in need of major renovation, often retail mortgage lenders won’t lend against that type of property. If the renovations needed are not so major, then the profit margins are comparably less also. And to get your money back, you’ll need to sell. And unfortunately there’s not much buying and selling going on at the moment.

    Answered on May 22 2012, Report content

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