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which option, release equity or buy to let

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  • which option, release equity or buy to let

    Hello, I wonder if you could advise me. I really don't know which is the best option for me.
    I am an owner (married but mortgage is in my name only) with a mortgage and have approx 100k equity.
    My son is three hundred miles away at University (scotland) and is finding it hard to cope financially due to exorbitant rent costs. I have another son due to go there in September 2009 also.
    I wish to buy a property near uni for them to live in as it seems the best financial solution.
    Should I...
    Release my equity and buy a house outright near the Uni so I can also let the spare rooms to other students? (I can get one for approx 80-90k)
    Get a buy to let mortgage? (is income from rent declared or allowable expense against the interest on mortgage?)
    Is there any other specific mortgage which would suit my needs better?
    I live in a remote area of Scotland and there isn't much advice to be had except from mortgage lenders and I would like impartial advice
    Thank you in advance

  • #2
    Edinburgh is a very expensive property market, so certainly any buy is not going to be cheap.

    Additionally, look at the fact that mortgage lending has seriously dried up and will continue to be dry, so I'd seriously investigate whether you would be likely to get a mortgage for a property purchase in the first place.

    I would take the advice the mortgage lenders you do speak to with some authority - your problem I think isn't one of whether it's possible, as much as whether it's probable IMO.


    • #3
      Thank you for your input.
      I have decided to release equity from my current home as I have since found out that I can offset any rental income against the interest paid for the equity advance even although it is for a different property. The fact remains that I released said equity purely for the purpose of buying a house to let out.
      Again Thank you for your input.

      BTW Property in Edinburgh especially on the outskirts isn't as expensive as you'd think. With two boys at University, it's cheaper to have a mortgage (and rent spare room out) than to be paying rent to someone else.


      • #4
        Just to add, if you buy a property with a few rooms to let in addition to those of your sons, then the rental yields can be quite good in student areas and may provide you with a nice income long after your sons have graduated!
        Mitchell Mann
        Mortgage & Insurance Broker
        MM Mortgages
        Tel/Fax : 0845 652 2580
        Mobile : 07832 214 664
        email : [email protected]