need help - which rate is better or are they the same?

[Deleted User]

Hi there,

some advice needed off a knowledgeble person,

Have a ucb £70k btl mortgage moving onto variable rate of 4.99 this month ( 23 years). am allowed to overpay without penalty
rental income is currently £450 a month

Am weighing up two options

1) paying £75 fee to ucb and making it 85% repayment and 15% interest only, all on variable rate. paying back £402 a month (at the moment)

2)leaving it all on interest only which is £288 a month (at the moment) and overpaying the additional £114 every month.

option 2 leaves more flexibility but i am only interested in which is better value over the short term (2 to 3years) and the full tern (23 years)

I like to save the extra £48 a month as a back up


Many Thanks to anyone who resonds

Let_Us_See

What is your long term plan? Most BTL are taken out on an IO basis and self-funding basis with the hope that when the owner eventually decides to sell the price of the property has risen sufficiently to repay the mortgage and produce a capital profit.

Naturally, if you decide to re-pay capital on a split mortgage then your potential profit will be even higher. However, an IO scheme should guarantee self-funding and perhaps permit a cash reserve to be built up to cover periods when you might not have a tenant or to make a on-off capital repayment.