Overpay Or Remortgage?

nicholasp

We currently have a £110,000 mortgage on a property valued at £280,000 at 2.19% (variable 1.69% above base rate), we also have approx £50,000 in savings. We are hoping to move in a couple of years, ideally renting out our current house and buying another. However we cannot decide if we should remortgage now at a lowish rate (putting the money in a fixed rate account) and then use the extra £58,000 to put down a large £100k+ deposit on a new house or should we pay off as much as we can of our current mortgage - hopefully be nearly mortgage free - and start again with the new house ie smaller deposit and higher mortgage. Any advice would be appreciated...

getmore4less

Work backwards for the new house.

How much is the new house?

Income?

Deposit required, based on max lending multiples and rates on LTV.

Is this more than £50k + 2 years savings?

if not then you don't need to raise more funds.
If it is you need a plan


Future BTL business,

draw up a business plan to make sure the rental is viable with various debt senarioes.
Start with rent(what is it?) and gross yield, if these look ok go into more detail.

Does your current lender give concent to let does it charge does it have any contraints on the LTV or rental, does it have time limits before it wants a non-residential mortgage.

Two years is probably long enough to change and not have to many queries about a future concent to let allthough things can change.


Ciirent lending:

You will struggle to get a better rate than you have so giving that up needs carefull consideration it is also lower than net savings rates so no point in overpaying.


Another option to think about is port existing loan with top up if needed and remortgage the let property at the time you let.