Sell flat to pay off chunk of home ?

sigur

Hi all,

I currently have a flat with a 50k mortgage, flats in block have recently went for around 120k.
Our home has a 170k mortgage, valued at around 220k. Both mortgages are 6.7% 5 year fixed, both 2 years into the deals and 3-4% early repayment charge on each.

Flat is currently let out but Im wondering whether it would make sense to sell. Selling would give a decent figure in order to get a good 5 year fixed and would almost half our current mortgage repayments.

Would this make financial sense ?

GMS

sigur wrote: »

Hi all,

I currently have a flat with a 50k mortgage, flats in block have recently went for around 120k.
Our home has a 170k mortgage, valued at around 220k. Both mortgages are 6.7% 5 year fixed, both 2 years into the deals and 3-4% early repayment charge on each.

Flat is currently let out but Im wondering whether it would make sense to sell. Selling would give a decent figure in order to get a good 5 year fixed and would almost half our current mortgage repayments.

Would this make financial sense ?

You would be potentially halving your residential mortgage but at what expense? How much would you lose in rental income from the flat?

Also you would have a possible £6800 early repayment charge on the residential in order to get a better rate.

You need to check the numbers before doing anything.

Crinz

How much is your BTL mortgage each month?
Is this interest only
How much are you getting in rent?

How much is your residential mortgage each month?
How long left on overall term?

By the looks of things you will need to save about 6-7k over the next 3 years to make this worthwhile. Also will need to add to that the profit you make on rent.

My gut feeling is that it isnt worth the short term gain rather than waiting 3 years but if you give some figures i'll try work something out.

sigur

Crinz wrote: »

How much is your BTL mortgage each month?
Is this interest only
How much are you getting in rent?

How much is your residential mortgage each month?
How long left on overall term?

By the looks of things you will need to save about 6-7k over the next 3 years to make this worthwhile. Also will need to add to that the profit you make on rent.

My gut feeling is that it isnt worth the short term gain rather than waiting 3 years but if you give some figures i'll try work something out.

Thanks for the replies folks, much appreciated.

Mortgage is £350 approx and is repayment mortgage.
Rent of £550 per month.
My residential mortgage is £1180, also repayment.
23 years left on both.

I had a play around with figures, with current mortgages available and using equity from flat sale I could probably get around 50k to put into our residential mortgage. Using this 50k and current fixed rates would possibly see our residential mortgage payments fall by nearly 50%.

It's that 50% fall that is appealing along with paying off a chunk of residential mortgage.

getmore4less

sigur wrote: »

Thanks for the replies folks, much appreciated.

Mortgage is £350 approx and is repayment mortgage.
Rent of £550 per month.
My residential mortgage is £1180, also repayment.
23 years left on both.

I had a play around with figures, with current mortgages available and using equity from flat sale I could probably get around 50k to put into our residential mortgage. Using this 50k and current fixed rates would possibly see our residential mortgage payments fall by nearly 50%.

It's that 50% fall that is appealing along with paying off a chunk of residential mortgage.

So the flat at £120k is yielding gross 5.5%

How much is the net rent after costs tax relief on the interest and tax onthe profit?

Lets say you can realise £110k from the flat after cost/voids while selling,

Even at gross yield now 6% you have been losing money on this flat.

With the ERC it may be worth keeping it a bit longer

Depends if you feel lucky on prices.

sigur

Thanks for that info, it has given me something else to think about.