Buy to Let Mortgage What are my rights

TheLastSeptember

I have been told by First Trust that my BTL mortgage deal will switch from interest only to repayment. Details are as follows:

Term: 300 months. Interest Only 60 months. Repayment (capital and interest) 240 months. 1.25% above the Bank's Base Rate for the term of the mortgage. I was 46 yrs old when I took out the mortgage.

The first 60 months has now elapsed. This means that my repayments will increase from £205 pm to £895 pm which means I will go from making an income per month to losing £700 pm. First Trust say they will not offer interest only unless there is a case for hardship and I do not fall into that category. I do not wish to sell until the market picks up. Can I negotiate?

Thrugelmir

Simply put no. You entered into a contract. So there's nothing to negotiate.

Why will you lose £700pm?

regprentice

This change in your repayments was foreseeable when you signed the contract. How did you intend to deal with this when you originally entered into the agreement ?

You have three choices I can see

Take the increase in repayments on the chin
Remortgage
Dispose of the property and cut your losses

DVardysShadow

TheLastSeptember wrote: »

The first 60 months has now elapsed. This means that my repayments will increase from £205 pm to £895 pm which means I will go from making an income per month to losing £700 pm. First Trust say they will not offer interest only unless there is a case for hardship and I do not fall into that category. I do not wish to sell until the market picks up. Can I negotiate?

You will pay down your debt with that £700. You will not be losing a penny. At the moment you are making a profit with borrowed money. Are you telling us that you are making a profit with borrowed money you cannot repay?

flecker

TheLastSeptember wrote: »

I have been told by First Trust that my BTL mortgage deal will switch from interest only to repayment. Details are as follows:

Term: 300 months. Interest Only 60 months. Repayment (capital and interest) 240 months. 1.25% above the Bank's Base Rate for the term of the mortgage. I was 46 yrs old when I took out the mortgage.

The first 60 months has now elapsed. This means that my repayments will increase from £205 pm to £895 pm which means I will go from making an income per month to losing £700 pm. First Trust say they will not offer interest only unless there is a case for hardship and I do not fall into that category. I do not wish to sell until the market picks up. Can I negotiate?

Be prepared for the possibility of having a very long wait.

poppy10_2

You are only getting £195 per month in rent???

regprentice

I see msn are imploring us to be nice to newbies, so let's try again.

As noted above you are not losing 700, it is repaying the capital on your loan. When you dispose of the property you will get that cash back. Clearly this is not what you intended, you hoped to dispose of the property at a profit within 5 years. This has not been possible due to market conditions. The figures you quote imply a negligible monthly profit (because your mortgage repayments have increased by 700 and this results in you losing 700).

So

You don't sound too distressed in your post, if the 700 is an inconvenience instead of a problem then you will just have to suffer quietly til things improve.

If you simply cannot find the necessary 700 ,then seek advice/help on the debt board board here BEFORE you miss a payment to your mortgage supplier.

The credit crunch/recession has been terribly inconvenient for you in that, in the five years you have had your mortgage, the Market has changed irreparably. I will be corrected by those more knowledgeable but I suspect any new mortgage is going to be considerably more expensive than your last. Also if your current rent is very close to your interest repayments (as suggested by losing all of the increase in repayments) then you will fail lenders current rent/repayment multiples on a higher rate of interest. You therefore need to think about whether the Market rents available for your property make a btl viable in the current Market (I suspect not)

Sadly we cannot simply argue our banks into giving us a sweet deal whenever we feel like it. If this were the case the credit crunch would not have happened.

Either

You need debt help, if so go to the debt board.

Or

You need help finding another suitable btl mortgage, if so repost your current details on this board in a new thread asking for advice.