buy to let Help

ludmilla

I have finally (fingers crossed) found a mortgage. As I am new to this, I wondered if anyone here thinks this sounds ok.

I don't work, but I do own a couple of flats. I have a tiny income (£4000 pa) and I need to renovate one flat and rent it out. I have no savings left and couldn't find anyone willing to offer me a mortgage. Eventually I have been offered this;

£40,000
10 years
interest only (I requested that to start with, and will swap over in a year)
5.39 fixed for 2 years then 4.99 thereafter
I will pay back £60,987.75
£1.52 for every £1 borrowed
24 payments of £179.82
96 payments of £166.48

My only other option was to ask my mother to get equity release but the interest rate seemed (if I were to pay it back, which I intended) to be in the region of 16%. However, I am a novice and it does seem rather a lot, but 5.39% is a heck of a lot less than 16% compound interest at that. The illustration sent to me for borrowing £49,305 was that after 15 years I would need to pay back £134.654.

I just wanted to make sure I wasn't making a mistake.

Any thoughts welcome.

Thanks

Ludmilla

kingstreet

TMW I take it?

It's the only lender without a personal income requirement so you don't really have an alternative.

ludmilla

yes TMW, as you say I don't have an alternative. So you could say its the best of a bad deal? Thank you for casting your eye over it for me.