Capital Raising Mortgages

Capital raising mortgages are a way of releasing the equity in your home to raise capital to spend on whatever you wish. Raising capital in this way can be a very cost-effective way of securing funds to spend on anything from investing in another property and paying off debt to renovating your home and buying a new car. There are generally few restrictions to what you can use the money for, so if you think a capital raising mortgage could help you, read on to find out more.

Capital raising is a way that homeowners can generate funds against the equity in their homes. It's a form of remortgaging that releases equity from the property, which is the amount of funds between the current mortgage and the property's value. For example:

Your home is valued at £200,000, and you have a £50,000 mortgage. You want to redecorate your property and need to raise £100,000 to pay for the work. You apply for a capital raising mortgage, and your total borrowing increases to £150,000, equivalent to a 75% loan-to-value.

Properties such as houses, bungalows, semi-commercial and commercial units can qualify for a capital raising mortgage. Capital raising on a mortgage-free property is also possible. The risk for mortgage lenders is very low, so borrowers often find it easier to get a mortgage on an unencumbered or mortgage-free property than buying a new one. If you want to expand the property in your portfolio, then capital raising buy-to-let mortgages are also available, typically for up to 80% loan-to-value.

As we’ve mentioned, there aren't many restrictions on what you can use a capital raising mortgage for. Some borrowers use the funds for:

This kind of mortgage can be a very cost-effective short-term solution to raising funds. Thanks to the lower interest rates, you can expect to pay less than if you were to get an unsecured loan when you increase your mortgage. However, you’ll face larger monthly mortgage payments and a longer repayment term. Your lender may also charge you early repayment fees on your existing mortgage. It's a good idea to speak to one of our experts at John Charcol before taking out a capital raising mortgage to ensure that it's the right decision for your personal circumstances. Get in touch today on 0330 433 2927 or enquire online.