Using Family Home as security for investment property!

R

Redbhoy

Guest
House worth 250K. Mortgage owed is 200K.
Would it be possible to use the family home as security to purchase a house which i intend to rent out?
Thanks!
 
Using family home as security for investment property

I would have thought it doubtful given that your loan to value is currently at 80%. However, if you were going to take a mortgage on the investment property with the same lender they may take a cross charge over both properties in order to allow you take a higher LTV on the investment property.
 
Re: Using family home as security for investment property

This may be stating the obvious, but are you prepared to put your family home at risk for an investment? Banks don't look for mortgage security for the crack - they hold the mortgage so they can reposess the property if needs be. While this may not be a likely possibility, it is an outcome that you need to consider.
 
Re: Using family home as security for investment property

Forgive my ignorance Mollie but can you explain ' they may take a cross charge over both properties in order to allow you take a higher LTV on the investment property. '
Im not sure about what a cross charge or what LTV is!
Re: Rainyday- trying to make the best of a bad situation. Im currently not residing in the 'family home' due to a split. I was thinking of actually moving into the investment property and renting the other two rooms. Probably not legal but neither is taking brown envelopes!
 
Using family home as security for investment property

Sorry about that. By LTV I mean loan to value. You might find that lenders are inclined to give a lower loan to value on investment properties (85%?) than they do on residential mortgages (90-92%). It can sometimes be the case that if there is a cross charge put in place, the two properties, residential and investment, are secured against each other and they may be willing to give you a higher loan against the value of the investment property. This has been my experience but may not apply to all lenders. Probably best to get proper legal advice at this stage though!
 
"I was thinking of actually moving into the investment property and renting the other two rooms. Probably not legal but neither is taking brown envelopes!"

Can't see anything illegal. You move into the second house - it becomes your Principal Private Residence. You can rent out rooms up to €635 per month in it without any liability to tax.

The original house becomes an investment property and you pay tax on any rental income (less allowable expenses) and probably Capital Gains Tax on the profit when you sell it.
 
I know that this is a "relationship" split situation so theres a lot more to consider. A lot depends on your finances, whether you are married, whether the "family home" is in joint names, whether you've reached any form of legal agreement - if you haven't, your partner/spouse ( and depending on whether they are joint owners etc.,etc.,) will have a big say so in what is to happen. It won't be a simple matter of using the family home as cross security.

Have you managed to sort out finances between you? I think I recall you mentioning in another post ( and forgive me for the personal touch) that matters were not amicable bwteen you.

I think you need to be talking to a solicitor and also possibly a mortgage broker who should be able to assess your specific situation -as opposed to baring your situation on this board.

Good luck.

mf
 
Thanks for the replies.
mf- I said on a previous post that it was an amicable split but since ive started this thread, things have deteriorated due to maney matters so im guessing that this issue will be a no-go anyway! I was trying to find a way around our situation without having her to sell the home as she doesnt want to. May be the only way now.
Thanks
 
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