Making equity work for me

[Jonboy_t]

We’re in a fortunate position of having about £350k equity in our property now and I keep getting the feeling that there should be a way of making this work for us rather than just being sat there, but I don’t know how/what/if there is a smart way to use some of it.

For context, we’re both mid-30’s, 5 year old son in full time paid education, I’m full time, she’s part time, Southampton based, ~£400k property. If we released some equity, I don’t think we could afford to repay it ourselves without getting income from it pretty quickly (6-12months), which is the big question mark for me!

We’ve both got a little experience in renovating properties, albeit for our own house, but we’ve done well from this in the past so this may be one avenue, however I don’t know what that opportunity is like now? Also, no idea if remortgaging is possible for something like this?

Any similar experiences around? I would add that this is just a little niggle bouncing round in my head, it’s not a ‘we are definitely releasing some equity, how do I spend it’ situation, so if it’s a dumb idea, I’m happy with canning the thought!!!

[p1stonhead]

I wouldnt do it personally. Pay off the mortgage when you can and relax.

It doesnt sound like you can afford to lose any of this money therefore borrowing against your home is, personally, absolute last way of raising funds for something especially as you will 'need' to raise income from it pretty darn quickly too!

Renovating properties can yield good results but if you pay people to do things rather than being a good DIY'er, that will drop dramatically. And tax will be a bd too.

Investing it means it could go down too which sounds like you wouldnt be able to handle financially. Returns are never guaranteed so it doesnt sound like this could be a route for you.

Absolute no from me!

Edited by p1stonhead on Wednesday 2nd January 08:28

[NDA]

You are potentially making more money by having it in the property than in the bank. Cash is negative at the moment and you'd have to take some risks to get a better return.

Not all property makes money of course, (I've lost a fortune on it) but I'd say you were better advised to keep the cash invested where it is.

[wisbech]

It is working for you by providing somewhere for you to live.

You could sell and rent I guess, and hope to get a better post tax return from the money than the rent costs

[JulianPH]

Jonboy_t said:

We’re in a fortunate position of having about £350k equity in our property now and I keep getting the feeling that there should be a way of making this work for us rather than just being sat there, but I don’t know how/what/if there is a smart way to use some of it.

I would seriously consider investing this money into a historically high performing long term asset class that generates regular monthly income by keeping your overheads down and is structured in a way that means all capital returns are completely free of tax when you come to sell.

i.e. keep it exactly where it is!

[covmutley]

I agree with others. You are within touching distance of owning the house outright with no fear of it ever being taken by the bank.

Keep it simple. Perhaps set a target of getting the house paid off early, then create an investment plan for using that money. Great position to be in.

[williaa68]

Perhaps an alternative way of thinking about it would be not what can I do with the £350k but what can I do with the additional free cashflow that I have as a result of not paying a mortgage on the £350k. If you've you done the obvious things like maxed out your and your wife's ISAs (£40k a year each at 35 will be a very nice pot to generate a tax free income from in 20 years), pension contributions etc. then maybe think about savings / pension for your child? Having the security of owning your own home is irreplaceable. That's not to say you shouldn't keep an eye on the mortgage you have left - there are some very good five year fixed rates around at the moment - but I wouldn't rush to remortgage and take money out.

[Jonboy_t]

Thanks for the advice chaps, very much appreciated .

We’ve made some choices since having little ‘un to cut the mortgage payments down to the cheapest repayment and change jobs so we can enjoy a better way of life now, but still put enough aside to Jack it all in at (hopefully) a decent enough age. Because of this, we can do things like send him to a decent school and not have to work all hours or in majorly stressful jobs, but it also means that our incomes don’t particularly reflect those of someone with a minimal mortgage in their 30’s, if you know what I mean!

Think I’ll can those thoughts I was having! On reflection, the points about stability and outright ownership do make more sense than risking it and having to back out of the way we live now.

Thanks again