Can You Use Equity Release To Buy Another House?

Firstly, why might you want to buy a second home? This can be for many reasons from purchasing a holiday home in the UK or abroad to helping a family member in need. Your reasons for wanting to buy a second home may be different to those mentioned above but the good news is that you may be able to use the equity in your current home to purchase your next property without the need to sell your existing home.

How Does Equity Release Work?

Equity release on the front of it is rather simple although receiving specialist advice is key to ensure that you are getting the most appropriate advice and the best deal for your individual circumstances. Taking advantage of an equity release scheme allows you to extract cash from the equity you have built up in your current home without the need to sell your existing property. Equity release does not require a monthly payment as the balance and associated costs are settled with the lender from your estate. This is great for clients who may be retired or no longer want to worry about monthly payments of a loan.

How much could you borrow to purchase your second home using the equity in your current property?

The amount of equity you can release depends on several factors, these include:

  • Value of your current property
  • Homeowners Age

To find out exactly how much you can borrow contact us today on 01489 876 574 and we will be happy to provide you with these details. Good news is that income and credit score are not factors so if you have been unsuccessful with a standard mortgage for your second home due to these reasons and you are over 55 equity release may be a viable option for you to buy a second home.

Equity Release FAQ

Equity release could reduce the IHT liability within your estate. If you were to buy another property after releasing equity within your home you may not reduce your liability we would recommend talking with a specialist in inheritance tax.

With any financial decision it is completely personal to you. At Primary Financial Solutions, we will work with you to understand your needs and advise you in the most suitable way for your individual circumstances.

Under the agreement of your equity release, the interest agreed on your equity release will be rolled up into the amount owed and paid back when your estate is settled and property sold. When you speak to Primary Financial Solutions about arranging your equity release they will provide you with all the facts and figures that are personalized to your individual circumstances.

If you are buying a second property using money from your equity release timescales are crucial. On average an equity release, application takes 6-8 weeks to complete.

Yes, releasing equity may affect your ability claim for certain benefits. Before you release equity from your home it is recommended that you speak with your local benefits office or government department to see how you may be affected individually.

What are the tax implications when releasing money via equity release?

The amount of equity released is tax-free which is a positive for many people who decide to use the equity that they have built up to buy a holiday home. Although this does not mean you will not be charged taxes when purchasing your second home. This also depends on where you are buying it below you will see a guideline of stamp duty costs for purchasing a second home in the UK.

Band Rate
up to £125K 3%
£125K+ to £250K 5%
£250K+ to £925K 8%
£925K+ to £1.5M 13%
£1.5M+ 15%

If you are planning on buying a second home abroad we strongly recommend that you ask your international estate agent about charges and local taxes that you may be subject to. Many of our clients have also asked their international estate agent to put them in touch with previous clients who have carried out similar transactions to get a first-hand honest insight into the property buying process in that country.

What Types of Second Homes Could You Buy After Releasing Equity from Your Main Residence?

Once you have released equity from your current home you can use the equity release to fund a purchase of a second home holiday home or a buy to let property. You can also purchase properties that may not normally be mortgageable like a mobile home or park chalet. Equity release gives you the same buying power as a cash buyer as you will be exactly that in the eyes of anyone selling you your second home a cash buyer.

Releasing equity from your current property to purchase a second home is a viable option for many people who want the benefits of having a second property without the additional monthly payments. If you have always dreamed of having a holiday home by the coast or a property abroad while keeping your family home close to family and friends contact the team at Primary Financial Solutions today and our team of advisors will work with you.

Why Choose PFS When Releasing Equity To Buy Another Home

  • Qualified Finacial Advisors
  • Compliant Advice
  • We Treat Customers Fairly

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