Using First Property Equity to Buy a Second Property

Discussion in 'UK Property' started by AlboNet, Dec 3, 2018.

  1. AlboNet

    AlboNet New Member


    Came across this forum a while back and have been lurking in the shadows, some great discussion on this site and figured you might be able to help mould my thoughts on the subject.
    Thanks in advance.

    The main question is when is the best time to buy a second home using equity from the first?

    Some context.
    Based in London, zone 3, we bought our property to live in a few years ago.
    Happy with the area and am confident it will grow in value over the years to come as it is situated around a busy commercial and residential area with excellent transport links.
    We’re now considering buying a new property to live in (more space) whilst renting out the existing one.

    The bank have confirmed that taking equity out of the current home is a feasible approach, we haven’t done a full deep dive yet but effectively there is extra equity available based on the existing property valuation.

    Which brings me to my question…
    Is there an optimal time to release equity in order to buy another property?
    During a price peak we can take more equity out of property 1 to spend on a subsequently more expensive property 2.
    During a lull I assume the opposite occurs.

    It would seem to me it’s really a case of buying whenever we want rather than playing to market dynamics.

    See what you think.

  2. Hi @AlboNet

    Welcome to the forum. You have hit the nail on the head with your last comment. When markets are flying you will have more equity but in theory property number 2 will be "more expensive". The opposite will occur when markets are struggling.

    If you could give us an idea of the level of equity you have in property one and how much you are looking to invest into another property we might be able to assist further.
  3. FWL

    FWL Member

    Hi @AlboNet

    I would be interested to hear if you have made any progress with this venture?
  4. Hi @AlboNet

    I forgot to ask, what is your current experience with London property prices? They seem to be softening all over London? Then again, if, as seems likely, there is a second EU Ref this would surely give a boost to London property prices?

    Where is the second property you are looking at based?

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