Changing to an interest only mortgage

sab8878

Hi there

I have a repayment mortgage with A&L and we are looking to rent it out. They said we could do this if we pay a fee of £95/year. Fair enough. But is it a straight forward request to switch it to an interest only mortgage? If it helps it is on a fixed rate until Januray and then reverts to a tracker + 0.75% after.

Any advice would be appreciated

grogdog

should be straight forward , they may want an admin fee of around 75 to do it, but they may also want proof of your repayment vehicle if you mov to interest only,but if they know it is buy to let they may be happy enough with you telling them it will be cleared by sale of property

Simon_Pugsley

I have just changed over to interest only mortgage with A + L. They required a £50 admin fee to change to interest only, and then a £50 charge when you want to change back. They did not requires proof of a repayment vehicle in my case.

Hope that helps

Simon

sab8878

very helpful. thanks both

karenj

Why are they asking for a fee to rent the property out in the first place? We rent ours out and our mortgage is with Nationwide. They don't charge any fees for us to rent the property, the only stipulations are that the mortgage is paid on time, we don't rent to students and DSS, Government officials, etc. etc.?

ds1980

All mortgage companies charge for things like admin, exit fee, change of this change of that.

£50 isn't too bad.

As it's abtl in essence now interest only is far more tax efficient if you own your own home with a mortgage. If not then keep it on repayment.

Reason being you get relief on the interest if you repay then this lowers the relief as you pay off the interest.

Eventually you'll have to remortgage onto a btl mortgage so if prices keep dropping be aware of the ltv. Minimum is usually about 15%. If this is the case then repayment may be a good option to keep the ltv stable.

feisty1

Some other things to consdier 1.any tax liabililities 2. have appropriate insurance in place ie ensuring the property is insured with a suitable landlord insurance policy 3. anything you need to do in order to make the property legally rentable ie Gas Safety check compliance with Health and Safety regulations

neverdespairgirl

karenj wrote: »

Why are they asking for a fee to rent the property out in the first place?

They don't have to allow you to let it at all, if you have taken out a residential mortgage.

feisty1

WRONG..........When a client approaches an exisiting lender some DO give permission

neverdespairgirl

feisty1 wrote: »

WRONG..........When a client approaches an exisiting lender some DO give permission

Some do give permission. They are not obliged to do so. Which is why I wrote, "They don't have to allow you to let it at all"

feisty1

Some do give permission. They are not obliged to do so. Which is why I wrote, "They don't have to allow you to let it at all"

"we are looking to rent it out. we are looking to rent it out. They said we could do this if we pay a fee of £95/year."

They had already stated they had sought permission and your reply was to "
Why are they asking for a fee to rent the property out in the first place?"

This is just causing confusion whe they had already said they'd gained permission