Reason needed for remortgage equity release?

Discussion in 'Mortgages' started by Adam Kahn, Oct 28, 2018.

  1. Adam Kahn

    Adam Kahn New Member

    I am trying to remortgage a buy-to-let property I own in order to release equity from the property.

    I would be releasing around 80k from the property.

    But my mortgage broker has said I need to give a reason for why I want to release equity from the property.

    I wasn't aware providing a sufficient reason was a requirement when releasing equity from a property you own. Surely so long as I ensure the necessary amount of equity remains in the property (25 - 40 percent) and can demonstrate I can cover payments (either myself or via rental payments), then whatever reason I need it for should not matter.

    I'm actually taking equity from the property because I don't feel holding investment property in the london is as profitable as it was and want to diversify. This could be in other property ventures or other types of investments - I have not determined a precise investment strategy yet, but my current mortgage deal has come to an end so I'm releasing equity now.

    So my question is - in the eyes of a broker/lender, what reasons are good enough reasons for why someone can withdraw equity from their property?

  2. Diversifying your investments is a perfectly good reason. If the rent on your buy to let property covers your re-mortgage payments then I dont really see an issue. I am suprised your need to give a reason - you might want to buy a car, repay a debt, what has it go to do with the mortgage company as long as you remain above the relevant equity limits and you have means to cover your mortgage payments.
  3. nmb

    nmb Well-Known Member

    Is it normal for your mortgage provider to ask why you are looking to remortgage - assuming that you have the correct income and equity in place?
  4. How many people give a 100% honest answer when applying for a loan and they are asked what it is for? As long as the financials add up, and you can afford the repayments, what is the issue?
  5. diyhelp

    diyhelp Active Member

    How did you get on with you mortgage application - what answer did you give them in the end?
  6. FWL

    FWL Member

    Has anyone else ever felt under pressure to justify why they have remortgaged a property even though from a financial standpoint they can afford it?
  7. lookinginvest

    lookinginvest Member

    I can see why a mortgage company might ask the question but deciding whether or not to offer you a remortgage deal on the back of your answer is bizarre. You probably have stronger financials than the vast majority of first time buyers who have mortgages approved every day.

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