Remortgage - What can they offer me?

bluegrover

Hi,

I am coming to the end of my (fantastic) tracker in May. I am being posted abroad and either have to sell or rent it out. I've done my figures and if I rent I have to pay in around £150 a month to cover EA fees, appliance insurance, central heating insurance etc. The rent received will just about cover the interest only payments. That means over the 5 years i will have lost £9000. I have agreed a 4.84% fixed for 5 yrs with my mortgage company.

The alternative I sell my property and lose 20k. I was hoping to ride out the downturn and after 5 years maybe sell it for a higher figure than today.

In terms of the mortage, is there anything the mortgage company can do? My LTV is around 90%, so well below the 75% that all the good deals require.

Can I plead hardship and request they give me a better deal so that I can meet my payments? Ideally I would like the rent to be able to cover everything, without me having to put more money in.

Does anyone else have a similar experience? I'm sure thy will be more flexible given the current climate. I just wanted to hear of other peoples experiences on how they approached it and what they managed to get.

Thanks
Dave

beecher

No you can't plead hardship and ask to be put on a better deal just because the rent won't cover your mortgage! 4.84% for 5 years is a pretty good deal, partcularly for that LTV. Why should they be more flexible, particularly when you've already agreed to the fix?

Have you asked for permission to let the house?

I think you'll be lucky if the house prices have increased by 20k in the next 5 years, and that's without taking into consideration the £9000 it'll cost you in mortgage payments (btw have you factored in voids and repairs?) I certainly wouldn't be counting on it.

I think your best bet is to sell now as you'll have the added problem of an Early Repayment Charge to pay if you fix for 5 years.

bluegrover

Thank you the reply, but I have already thought through the permission to let etc.

Also I don't think anyone knows what house prices will do in the future, except they have eventually recovered every time there was a drop. Just how long it takes is the unknown. 5 years seems to be reasonable enough.

I was looking to hear from people who don't have much equity and have talked to their mortgage companies and done a deal.

_Andy_

bluegrover wrote: »

Thank you the reply, but I have already thought through the permission to let etc.

.

Is the mortgage lender aware you're renting it out then?

beecher

No-one knows, but it is a big gamble to make. I'd hazard a guess at 10 years myself.

If you have a high LTV, you're a big risk to the lenders so why would they do you a deal? It isn't going to happen, simple as that. The deal you've been offered is really good considering your LTV. You could wait til May and hope that 5 year fixes come down a bit. You do say you've agreed a deal though, so make sure that you can swap to a new and cheaper deal if it comes up.