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Ask an Expert Can I remortgage to raise funds for property development and to start my own business?

Can I remortgage to raise funds for property development and to start my own business?

Q: I have an interest only mortgage and owe £213,000.00 with equity of £100,000.00. I would like to remortgage with an additional loan of £70,000.00 for property development and to start a business. What can you do?

A:

On the presumption you have an interest only mortgage for £213,000 on your main residence, which is currently valued at £313,000 i.e. with equity of £100,000, then there may be finance options available to you.

Your intention to use the proposed funds for property development and to start a business would be acceptable to some lenders – However, you should be mindful that if you are starting a new business which will be your main employment, then lenders will require you to have been running that business for at least one year, and provide the first year SA302 before taking income in to account for the purpose of servicing mortgage repayments. It may be viewed that current earned income will seize as your time will be dedicated to the new venture – So that we can fully understand your circumstances this would need to be discussed in more detail with one of our qualified and regulated advisers.

Another point in case, is that interest only mortgages are not generally available beyond a certain loan to value ratio without being able to liquidate an unrelated asset as an exit strategy for the loan. So, if you were to remortgage to another lender then interest only may not be available, dependent on your other assets. If this is the case, and you wished to keep your existing mortgage on an interest only basis, we could look at potentially raising the additional funds required by arranging a second charge facility.

I trust this answers your questions, and I would welcome the opportunity to discuss your options in more detail over the telephone.

These questions are for information purposes only and do not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration
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