Finance second property through equity in first?

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    Finance second property through equity in first?

    Hi All
    am I barking up the wrong tree here-

    Property 1 is in wife's private name with 40% equity in its value.

    we've created a ltd company for further property purchases together

    One way to fund further property would be to remortgage property 1 and physically carry some of the equity to property 2. (Unless we have complicated matters by property 1 being solely in wife's name?)

    My question is - is there a way of using the equity that is within property 1 to virtually fund the deposit for property 2 whilst actually leaving property 1's mortgage alone? Some sort of charge or something? Has anyone heard of this?

    Thanks in anticipation

    ​​​​​​​Chris



    #2
    Yes you can (your wife) release Equity from the property owned in a personal capacity, the monies are then loaned to the company as a Directors loan and the company uses such monies to fund the deposit for a new Limited Company acquisition.
    Asi advise all clients or in this case Forum posters ,it is important to seek the independent advice of a good accountant , Chtd or Certified to understand the benefits and potential negatives of owning via an SPV Co before undertaking this exercise which in itself is very straightforward assuming no issues in the shareholding structures of the Co

    Comment


      #3
      Is property 1 your residential property or a tenanted BTL property? Is it on a fixed term mortgage and if so roughly how long remaining on the fixed term?
      One complication with it being solely in your wife’s name is that I would imagine this means that lenders will only take her income in to consideration and not any of your earnings, which is fine if she earns enough money to cover a larger mortgage but might be an issue if they consider her unable to afford an increase in monthly mortgage payments.

      Comment


        #4
        My apology for not reading the second element of your post correctly. I note you do not wish to disturb your existing residential Mortgage but to use free equity to fund the deposit, unless you can secure a further advance from your lender or a second charge mortgage the latter of which will be more expensive there are no BtL lenders who will put in place a lien on the primary property whilst funding a mortgage of say 75% to the Limited Company given that one element is regulated and the BtL Unregulated. Do check with your primary lender as the majority of lenders will permit capital raising and offer a Further Advance at a comperate leaving the current main mortgage undisturbed. This of course is always subject to meeting affordability assessments.
        Apologies for not reading your posting correctly last night.

        Comment


          #5
          Originally posted by BTL investor View Post
          Is property 1 your residential property or a tenanted BTL property? Is it on a fixed term mortgage and if so roughly how long remaining on the fixed term?
          One complication with it being solely in your wife’s name is that I would imagine this means that lenders will only take her income in to consideration and not any of your earnings, which is fine if she earns enough money to cover a larger mortgage but might be an issue if they consider her unable to afford an increase in monthly mortgage payments.
          Property 1 is a BTL. My wife is part time c20k per year and the house is deliberately in her name only as I'm a higher tax payer. We thought just one BTL would suffice but now we're expanding our horizons we have created an SPV with both of us as directors going forward for the next BTL.

          Comment


            #6
            Originally posted by loanarranger View Post
            My apology for not reading the second element of your post correctly. I note you do not wish to disturb your existing residential Mortgage but to use free equity to fund the deposit, unless you can secure a further advance from your lender or a second charge mortgage the latter of which will be more expensive there are no BtL lenders who will put in place a lien on the primary property whilst funding a mortgage of say 75% to the Limited Company given that one element is regulated and the BtL Unregulated. Do check with your primary lender as the majority of lenders will permit capital raising and offer a Further Advance at a comperate leaving the current main mortgage undisturbed. This of course is always subject to meeting affordability assessments.
            Apologies for not reading your posting correctly last night.
            Sorry it's probably my vocabulary after Xmas excesses! I'm aware that nothing on this forum constitutes advice I'm just picking brains.

            I thought I might be pushing my luck - a further advance on BTL property 1 to generate a physical deposit for BTL property 2 seems to be the only way forward then really.

            Comment


              #7
              Never any need to apologise, I did research various lenders criteria and unfortunately there is no alternative to that mentioned

              Comment

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