Using capital release for the purchase of a new property can be a great way to pay off an existing mortgage and obtain additional funds. It is a common practice for homeowners to increase their portfolio by remortgaging their property to free up capital, but this may not be an option for everyone. For those who are unable to remortgage, capital release plans can be used to access the cash fixed in their home. This tax-free cash can then be used to purchase a new property, with no monthly repayments required. Capital release plans are available to those over a certain age, and the maximum amount of capital that can be released depends on the individual's age and finances.
The amount released is usually between 26% and 30.5% of the value of the property. It is important to consider any existing mortgage that needs to be deducted from the proceeds of the sale, as this will reduce the capital that can be used as a deposit. For those who are not elderly, remortgaging or using a second-rate mortgage are other options for accessing part of the capital in their home and helping to buy another property. Young people may not have access to capital release plans, but they can still use some of the capital they have accumulated to help buy a second property. When it comes to freeing up capital and buying for rent, there are different rules regarding the percentage that can be released from your property. It is important to take into account factors such as existing mortgages, rental income potential, and any special offers from lenders that are currently available.
Once these calculations have been made and recommendations have been given, the request can be sent to a potential capital release company.