Using oz equity for uk mortgage

[Linnyloo]

Hi

 

We are thinking of moving back to UK next year and am exploring options with our current house.  

We currently have about $400k equity in our house in Melbourne.  We won't be able to buy a house in UK without this cash, but OH who is an Aussie is hell bent on keeping it as an investment (and back up plan if we decide to move back) .  The house would effectively pays for itself with rent covering mortgage.  Would we be able to  use equity as our uk deposit - is this a thing?

 

thanks in advance for any advice, tips, thoughts.

 

cheers

 

[Collie]

I think you would have to redraw against your AU mortgage first and then use the cash as your deposit.

If there is already a mortgage on your Melbourne home, you will struggle to get a 2nd mortgage on it from a UK bank or any bank TBH (which I think is effectively what you are trying to do). The level of "equity" in your home depends on the market, eg if the market crashed, the equity will diminish (& vice versa).

So you need to do it as 2 separate transactions, redraw (or refinance) In Australia.

Then transfer the AUD to GBP for your UK purchase.

I think your OH's plan is wise btw.  Why not rent for the 1st year in the UK to settle and make sure that you are committed to it first?  You can always redraw or refinance the Melbourne property down the line when needed.

The GBP is expected to continue to fall in value in the next year also.

[bristolman]

As far as I'm aware you wouldn't be able to directly use the equity in your Australian house, you would need to draw against it in Australia and transfer the money. The rate is good at the moment and as is the way with exchange rates it's anyone's guess where they will go in the future.