BTL Fixed rate expire in Jan - what to do?

Nick_Knock

Hi hope you can help?

I have a property that I have owned for 10yrs and is currently being rented out.

The fixed rate mortgage is about to come to an end, the current rate being 5.29. It will then revert to 1.95% above bank of england base rate.

Now in the short term the payments will drop, but what to do? (wish I had a crystal ball lol)

My situation has changed since I took this mortgage out. Three years ago I developed ME and unfortunately at the moment am too unwell to work. Income consists of IB and DLA. The rent more then covers current mortgage and insurance and I have money to cover any deficet period although current tenant on yearly contract.

My questions to you are:
1. Would a lender consider me? LTV is 75%
2. Would I be best staying where I am and monitor base rate?
3. Would it be worth going to existing lender and asking for new fixed rate. What information would they require from me i.e proof of earnings, proof of rental income?

I am sure there are other questions, but mind has gone blank

Thanks in advance for your replies

Fiddlestick

Nick_Knock wrote: »

The fixed rate mortgage is about to come to an end, the current rate being 5.29. It will then revert to 1.95% above bank of england base rate.

Now in the short term the payments will drop, but what to do? (wish I had a crystal ball lol)

Start paying down the equity?

Nick_Knock

Do you know what? My brain must still be in bed, why didn't I think of that? - that is such a good plan in the shorterm, but what about when the interest rates start to rise how would my current position stand me to remortgaging?

dimbo61

The more equity you have in the property the easier it would be to get a remortgage but with a rate of 2.45% I would simply keep my existing mortgage payment the same and watch the mortgage balance decrease.
Speak to your accountant to check the tax/benefits situation

Fiddlestick

Nick_Knock wrote: »

Do you know what? My brain must still be in bed, why didn't I think of that? - that is such a good plan in the shorterm, but what about when the interest rates start to rise how would my current position stand me to remortgaging?

Well if you put the sarcasm aside, you would appreciate that since the interest rate will drop down you can afford to pay down even MORE equity whilst interest rates stay low.

When they start to rise again, you will be in a much more favorable LTV position than you are currently.

It's not that 75% is a bad position by any stretch of the imagination, but the better you can get that then the better kinds of deals you will be able to get when rates start to go up.

Nick_Knock

Sorry Fiddlestick if my post came across sarcastic - I was geniune in my reply - I honestly had not thought of paying off the equity which is why posting a thread on here was a good idea. I was just thinking about remortgaging at the end of the fixed rate, not the bigger picture.

Seams like it makes financial sense to pay off some of the equity, keep an I on the interest rates and go from there.

Thanks everyone for your replies, much appreciated

Fiddlestick

Nick_Knock wrote: »

Sorry Fiddlestick if my post came across sarcastic - I was geniune in my reply - I honestly had not thought of paying off the equity which is why posting a thread on here was a good idea. I was just thinking about remortgaging at the end of the fixed rate, not the bigger picture.

Seams like it makes financial sense to pay off some of the equity, keep an I on the interest rates and go from there.

Thanks everyone for your replies, much appreciated

No problem, apology accepted - it can be hard to convey mood across the internet sometimes