increasing the mortgage on my BTL property in order to provide a deposit for another

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • increasing the mortgage on my BTL property in order to provide a deposit for another

    Hello everyone,

    I currently have a BTL property with an £88k mortgage on it. The property is worth £250k. I am a few months into a two-year fixed rate 4% mortgage with Birmingham Midshires.

    I would like to increase my mortgage on this property in order to provide a deposit for another BTL property. The mortgage deal I am on allows up to 60% LTV, so I had vaguely assumed that I could simply apply for a further draw down up to the full 60% at the same rate (which would give me up to a further £62k).

    My mortgage broker has informed me, however, that if I want to take a further draw down on this mortgage, I would have to pay 6.19% interest on it. Does anyone know if this is normal? Is another option?

    All the best
    Alex

  • #2
    Quite normal - the original tranche of money of which you first loan was a part would have been used up months ago. The best you could hope for is one of the current BM offers but as this is a further advance, their normal SVR is what you usually end up with.
    CFA

    Comment


    • #3
      Thank you for the reply -- very helpful. This makes sense, although Birmingham Midshire's SVR is currently 4.84% (which would be fine) so the 6.19% interest rate that I have been quoted is well above that. I suppose that they are well within their rights to quote whatever interest rates they like on a "take it or leave it" basis. Are there any other options?

      Comment


      • #4
        Just wondering, does anyone have any further thoughts on this?

        The only other option I could think of would be to borrow with the lender placing a second-ranking charge on my property -- although I don't imagine that lenders would often be willing to do that at an interest rate which was any better than the 6.19% offered by my current lender.

        Has anyone else been in a similar situation?

        Comment


        • #5
          I doubt a 2nd charge lender are going to be any cheaper than the amount your existing lender will be charging and you will have both additional valuation and legal fees. The other factor that a lot of people considering 2nd charges need to take on board, is whether the 1st charge holder will allow a charge behind them in the first place, many don't.
          CFA

          Comment


          • #6
            Thank you again for your advice.

            I am surprised that this situation doesn't crop up more often. The interest rate which Birmingham Midshires has offered me seems extortionate for what is effectively 60% LTV in the current interest rate climate; out of interest, what sort of interest rate are other people being offered for further borrowing at the moment? (I realise it won't affect me, I am just curious as to whether such high rates are commonplace for further borrowing).

            Comment


            • #7
              Have you got an early repayment charge if you exit the mortgage and start again? It might not be that high, check it out? It might be OK to completely re-mortgage with a different lender for the full amount.

              Comment

              Latest Activity

              Collapse

              • Residential Remortgage, Consent to Let and Purchase of New Build
                ajtaylor
                I have a complex situation I would welcome some advice on. I have stumped my two mortgage broker so far. Any ideas/tips would be most welcome. The scenario is;

                My wife and I currently own outright a property worth £410k. We are looking to release equity in order to purchase a new build,...
                15-07-2017, 21:27 PM
              • Reply to Residential Remortgage, Consent to Let and Purchase of New Build
                Logical.Lean
                Sometimes, you get the feeling that some brokers sometimes, use smoke and mirrors, to make it more complicated than it seems so you are happy to pay their fees, because they have been able to turn your 'difficult' situation around....
                20-07-2017, 20:41 PM
              • After much procrastination I need to ask some questions about Loans.
                Logical.Lean
                Sometime ago I posted something along similar lines, but it's now clearer to me what we want to do.

                My wife and I live in Merseyside where we have paid off our residential mortgage about 4 years ago.

                We have a Buy to Let with a 70% loan at £90K

                I work as a Consultant...
                20-07-2017, 18:27 PM
              • Reply to After much procrastination I need to ask some questions about Loans.
                Logical.Lean
                Does the fact that I will "almost" definitely want to let it out at some point in the future, (just not sure on the timescale) impact the answer to question 1 ?...
                20-07-2017, 19:03 PM
              • Reply to After much procrastination I need to ask some questions about Loans.
                MrShed
                2 simple answers!!

                1 - yes
                2 - wholly dependant upon lender
                20-07-2017, 18:32 PM
              • Paying off my BTL
                dotcotton999
                Evening all,

                What are people's thoughts on paying off a BTL mortgage early... especially seeing as mortgage interest is no longer seen as a 100% deduction.

                I currently have 18 years left on my mortgage but I was thinking of reducing my term to get it paid off especially because...
                19-07-2017, 19:09 PM
              • Reply to Paying off my BTL
                Logical.Lean
                Can you use excel?

                You might be able check different scenarios, and see what your return on (Your) investment after tax is.

                And you can compare different levels of borrowing, interest rate, and taxation.

                Note I say your investment because

                Say...
                20-07-2017, 18:11 PM
              • Reply to Paying off my BTL
                PJackson
                To be pedantic, the amount you can deduct is reducing to zero but you get 20% tax relief on what isn't deducted....
                20-07-2017, 15:19 PM
              • Reply to Paying off my BTL
                loanarranger
                Heads you win , Tails you win.
                have you considered putting aside more of the rental surplus and once you have a £1000 plus to make a Capital Payment off of your mortgage or indeed request the loan to be converted to a Capital & Interest loan and make progressive reductions and if there were...
                20-07-2017, 13:42 PM
              • Reply to Paying off my BTL
                boletus
                That is not correct. The amount mortgage interest payments can be offset for higher rate taxpayers is reducing to 20%.

                Whether to pay off your mortgage depends on your individual circumstances, now and in the future. Paying it down to a level you are comfortable with would be sensible....
                20-07-2017, 13:37 PM
              Working...
              X