95% Mortgage, should I pay some off?

Sarahfb_2

Hi All,

Apologies if this is in the wrong place but I need some mortgage advice and wondered if I could get some help here.

My situation is that I was a first time buyer in 2007, purchased a flat for £140k at 95% value - which I wouldn't get now I am sure. My interest rate is at a shocking 6.75% fixed for another year.

Anyway, I would like to start renting out the property and have been informed I need to reduced the % and so reducing the lenders risk. I have no other debts so am contemplating getting a 0% credit card and transferring what I can to the credit card to increase my equity in the flat. I will then be able to pay the CC off quicker and if any credit left at the end of the term i can transfer to another 0% card.

So i just wondered if I am going down the right track or I should stick with what I have and save instead?

I would be really grateful if anyone had any thoughts on this.

Thanks

S

CloudCuckooLand

What % improvement have they asked for?

I would presume they want you to be at 90% to cushion their position. Depends if just consent to let, or conversion to BTL.

As you say, its unlikely you would get what you paid for it. In fact, depending where you are and exactly when you bought, I would guess you are borderline negative equity, at least.

So, to get to a 10% equity position would require £14k. Minimum. You could be well into NE, say another 10%, so would need £28k.

I don't think it is feasible or sensible to do those sort of amounts with CC juggling.

You have eliminated debts since April so should have a decent ability to save for the year, and meantime the recovery in prices could continue as well. Getting your equity in a position to obtain a lower rate would be sensible.