For clients with an unencumbered property it can be appealing to use their home to capital raise, funding the purchase of an additional property.
If they are intending to let the newly purchased property out, either long term or for short term holiday rentals, this means they therefore can take advantage of standard residential mortgage deals, rather than specialist products which are often priced higher with more restrictive criteria.
There are many reasons why people choose to capital raise against their existing home to fund an additional house purchase. Here are the three most common:
- to purchase investment property as an asset and rent out for a monthly income
- to purchase a property in preparation for retirement, moving in once they are ready and then selling their previous home to pay off the mortgage (also known as sale and downsize)
- to purchase a second home or holiday home to enjoy at their leisure, with the option of arranging short term rentals when they are not utilising the property
If you have clients looking to capital raise give us a call to see how we may be able to help.