Advice required on remortgage please

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    Advice required on remortgage please

    Hi everyone.
    I have one BTL which has increased by approx £20k in value since purchase along with our own property which has increased by approx £100k in value since we purchased.

    The BTL was on a fixed rate interest only which ended approx march this year and has since reverted to a variable, which at the moment is a lot less than the fixed was.

    However like most people Im acutely aware that this low interest rate will not last too much longer and as such would like to know what would everyones advice on the best course of action.

    Original BTL property purchase £120k
    Current value approx £140k

    To fund the purchase I took out:
    BTL Interest only Mortgage of £100k
    FOR THE £20K DEPOSIT
    I took out a further advance interest only mortgage on our existing residential property.

    Interested in how everyone would now proceed with this.
    Currently the rent each month is £560.

    Thanks

    #2
    Originally posted by roypartington View Post
    However like most people Im acutely aware that this low interest rate will not last too much longer
    The Times today suggests that rates will stay unchanged until the end of the year; no, I don't know, either...
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      You are at 71% LTV on the existing B2L - you will end up with a load of costs moving for very little gain, so why not ask your current lender if they have a fixed package you can change to, most are quite accommodating
      CFA

      Comment


        #4
        Hello Roy,

        You don't say what rate you are currently paying on your BTL.
        I'll take a wild guess at base + 2%.
        Presumably you're looking for a bit of stability, so a 5 year fix.

        Currently 5 year rates at 75% ltv are around 5.5%.
        Plus fees etc, maybe £3000.

        So if the BoE put rates up, they would need to average 3.5% + over the next 5 years for you to be worse off.
        So very roughly, if rates had a linear increase for the next 5 years, to reach your break even point, you'd be paying nearly 10% in 5 years time.
        I can remember 15% rates so I'm not saying it can't happen, just don't think it's very likely.

        Also, at the end of the 5 year fix you would revert to base + 4% (aprox), far higher than your existing rate.
        You also would be subject to early repayment charges if you needed to sell early. Maybe 3k.

        In the first place, I would definately follow cfapropertys' advice and see what your current lender can offer. I'm a bit more sceptical that they'll offer anything decent.
        Another wild guess, but I think they'll only offer something like a 3 year fix at double your current rate, reverting to a high SVR.
        Well worth a try though.

        Failing that, stay as you are. Discipline yourself to save the money you would have paid on extra interest and fees and build up a good reserve fund.

        I wouldn't change from your current lender if the above assumptions are correct. If you are that risk averse, then perhaps better to sell up and bank your profit. Well under the CGT threshold for a couple BTW.


        Disclaimer: I don't work in the financial industry (and I've had a drink!)

        Comment


          #5
          I've had a drink and tap water is safer .

          Comment

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