Best place for unencumbered mortgage
Discussion
I’ve been having a look at main providers and when I’ve looked at most of their applications the option for getting a mortgage on a house you already own outright isn’t there.
For reference I’ve got a property which I own outright that is worth in the region of £360-370k and am looking to borrow £75k against it, £12k of which is to pay off a loan I used for home improvements (new kitchen and bathroom) and the rest I want to fund starting up a new business with.
Ideally I want to get one for say 15 years not a longer term but my intention would be (if everything went to plan) to pay it off within 4-5 years max.
Any advice on best places to look at would be appreciated as I know it’s not the most common situation when applying.
For reference I’ve got a property which I own outright that is worth in the region of £360-370k and am looking to borrow £75k against it, £12k of which is to pay off a loan I used for home improvements (new kitchen and bathroom) and the rest I want to fund starting up a new business with.
Ideally I want to get one for say 15 years not a longer term but my intention would be (if everything went to plan) to pay it off within 4-5 years max.
Any advice on best places to look at would be appreciated as I know it’s not the most common situation when applying.
Walter Sobchak said:
I’ve been having a look at main providers and when I’ve looked at most of their applications the option for getting a mortgage on a house you already own outright isn’t there.
For reference I’ve got a property which I own outright that is worth in the region of £360-370k and am looking to borrow £75k against it, £12k of which is to pay off a loan I used for home improvements (new kitchen and bathroom) and the rest I want to fund starting up a new business with.
Ideally I want to get one for say 15 years not a longer term but my intention would be (if everything went to plan) to pay it off within 4-5 years max.
Any advice on best places to look at would be appreciated as I know it’s not the most common situation when applying.
Almost all lenders will decline an application where the funds are for business purposes.....only a couple would consider, circumstances dependent.....For reference I’ve got a property which I own outright that is worth in the region of £360-370k and am looking to borrow £75k against it, £12k of which is to pay off a loan I used for home improvements (new kitchen and bathroom) and the rest I want to fund starting up a new business with.
Ideally I want to get one for say 15 years not a longer term but my intention would be (if everything went to plan) to pay it off within 4-5 years max.
Any advice on best places to look at would be appreciated as I know it’s not the most common situation when applying.
Sarnie said:
Almost all lenders will decline an application where the funds are for business purposes.....only a couple would consider, circumstances dependent.....
As the expert, I'm sure you're right, but can you explain why? If someone wants to take out a £75K mortgage on a house worth £360K, why do they care what it's being used for. If he can't keep up repayments, they repossess, sell the house, take their £75K plus expenses, and the OP's mate keeps the balance. They can't lose. TwigtheWonderkid said:
As the expert, I'm sure you're right, but can you explain why? If someone wants to take out a £75K mortgage on a house worth £360K, why do they care what it's being used for. If he can't keep up repayments, they repossess, sell the house, take their £75K plus expenses, and the OP's mate keeps the balance. They can't lose.
Because lenders are not loan sharks or bailiff's, they don't want to waste their time and money reposessing a property because an applicant's business failed. Thats not what they are in it for....Sarnie said:
Almost all lenders will decline an application where the funds are for business purposes.....only a couple would consider, circumstances dependent.....
I found this very surprising. I bought a few BTLs outright thinking I would later take the cash back, but it seems you need a reasonable justification on how you would spend the money. I assume investing in the stock market is also not acceptible?Say I wanted to spend the money on a Ferrari, a business, or even coke & hookers, I would have to sell a house, take e.g. 20% out and then buy another house at 20% LTV which lenders would queue up to fullfil. Where is the logic in that?
dmahon said:
Sarnie said:
Almost all lenders will decline an application where the funds are for business purposes.....only a couple would consider, circumstances dependent.....
I found this very surprising. I bought a few BTLs outright thinking I would later take the cash back, but it seems you need a reasonable justification on how you would spend the money. I assume investing in the stock market is also not acceptible?Say I wanted to spend the money on a Ferrari, a business, or even coke & hookers, I would have to sell a house, take e.g. 20% out and then buy another house at 20% LTV which lenders would queue up to fullfil. Where is the logic in that?
Simpo Two said:
A house is good security - if you screw up they win the house.
My point is they wouldn’t lend me £50k against a property for a frivolous reason, but they would be very willing to let me sell a house and buy a new one with a £50k mortgage. Seems a total waste of time and effort! dmahon said:
Simpo Two said:
A house is good security - if you screw up they win the house.
My point is they wouldn’t lend me £50k against a property for a frivolous reason, but they would be very willing to let me sell a house and buy a new one with a £50k mortgage. Seems a total waste of time and effort! h0b0 said:
OP's example is not frivolous...it is the way he will be paying the mortgage. Lenders want to see a reliable income and a new business is about as far away from that as possible.
In the olden days, when I were a lad, there used to be things called non status mortgages. If you were borrowing on a small LTV basis, say under 50%, they didn't care about your salary, income, etc. TwigtheWonderkid said:
h0b0 said:
OP's example is not frivolous...it is the way he will be paying the mortgage. Lenders want to see a reliable income and a new business is about as far away from that as possible.
In the olden days, when I were a lad, there used to be things called non status mortgages. If you were borrowing on a small LTV basis, say under 50%, they didn't care about your salary, income, etc. Just to add another crazy mortgage situation....
I agreed on a mortgage to build a house. When it came time to close the appraisal for the house had increased - reducing the loan to value ration. The bank tried to back out of the mortgage because they "don't like change".
This only came to light on the day of the closing after the sale of the previous house which happened on the same day. We checked into a hotel that night where we lived for 7 days with our 6 month old because we were homeless. (a bit dramatic as we were in a two bedroom suit but I think it meets the criteria)
The reason for the original undervaluation was because the developer had listed a sale price for our spec house. The appraiser refused to appraise above the sale price as "the market had defined the price". But, that was the price before options and the standard house, while meeting all code requirements, was little more than an empty box. The appraiser would not include the upgrade costs because "you never get them back". Same guy did the post build appraisal and said "nice house". I knew I was in trouble that moment.
I agreed on a mortgage to build a house. When it came time to close the appraisal for the house had increased - reducing the loan to value ration. The bank tried to back out of the mortgage because they "don't like change".
This only came to light on the day of the closing after the sale of the previous house which happened on the same day. We checked into a hotel that night where we lived for 7 days with our 6 month old because we were homeless. (a bit dramatic as we were in a two bedroom suit but I think it meets the criteria)
The reason for the original undervaluation was because the developer had listed a sale price for our spec house. The appraiser refused to appraise above the sale price as "the market had defined the price". But, that was the price before options and the standard house, while meeting all code requirements, was little more than an empty box. The appraiser would not include the upgrade costs because "you never get them back". Same guy did the post build appraisal and said "nice house". I knew I was in trouble that moment.
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