expecting a baby - equity release?(6 Posts)
Hi all, looking for some advice on options please. My partner and I are expecting in the summer. We have a house together and have a large amount of capital in it (about 50% of the value, and it is a large house). We both work full time and have been using savings to do some work on the house so have rather depleted our funds. My partner's income would cover mortgage repayments - just - monthly but we'd be stuck for bills. My question really is this: if I wish to have more time off than just my maternity leave (and not work) is there a clever way of releasing some equity from the house and investing it or creating some form of passive income so that I can stay at home with my family? I am currently weighing up options as obviously I would want to make the most of maternity benefits (workplace stipulates I must come back to work for 3 months after leave in order to not have to pay back occupational mat. pay), but I may want to be at home for longer with my family.
thanks in advance
I don't really see how that would work. To release equity you'd need a bigger mortgage, but it sounds like you need both salaries to pay what you have.
You could downsize, but I don't think that's what you're looking for.
Do you have any other debts like credit card or car loan? Could you remortgage instead to reduce your monthly repayments? You might be able to borrow a larger amount at a lower interest rate and/or over a longer term.
Short answer: Yes, there's very likely to be a solution.
Longer one: If you're considering releasing equity from your home this is a complex and potentially risky area. If I were you I'd be completely uncomfortable making any decision without having a financial adviser look into it in depth. You will be able to find one who can look into it without charging an upfront fee, and pay once the solution is implemented. Good luck!
DO NOT DO IT!
Equity release is expensive. You get a lump of cash but the lender wants to be handsomely compensated for having to wait to realise a profit on the loan. Which won't happen until the house is sold or you buy the lender's share back from them. By the time it falls due, they will want a bigger slice of your house than you'd expect. Then how will you feel, when you've sunk your savings into a house that somebody else owns a massive chunk of?
You could remortgage. But basically you are taking out debt to fund a life where the books don't balance, and this would be made worse by increased mortgage repayments. It's not going to work.
However, if you are thinking about a temporary situation for a few extra months, can you save up from now, or investigate moving to interest only repayments for that period?
Or, if a more permanent lifestyle change, could you move to a smaller house to reduce your mortgage payments so that your partner's income can cover all the bills?
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