To remortgage or not - Please help.

Poorlass

Hi All,

I could really do with some advice.

We own a flat which we have never had re-valued since we bought it in 2004. The flats that have sold in our building have been sold around the £150000 mark. We still have £80000 remaining on the mortgage but we have outgrown the place and could do with some extra space. We have been paying off debts up until now and have not been able to save.

We have not considered remortgaging up until recently and as the interest is quite low at 1.25% I was thinking of paying off the mortgage in 3/4 years. However friends and family think we should remortgage and get a bigger place as our lives are a little bit on hold.

We are both 35 and have a combined salary of £63000. Current mortgage payments are just over £400 & we now have no other debt. We have one daughter. We have a property abroad worth about £30000 which we have just paid off and would rather not sale.

Is it worth remortgaging onto a buy to let mortgage to get the equity out of the flat? HSBC who the mortgage is with would remortgage for 80% LTV so I could take between £20000 and £40000 at the most. We could then use this as a deposit for a bigger property and rent the flat. I rented it for a year previously for £800 without using estate agents and rentals have gone up since. I got consent to let from HSBC then for a year. HSBC have however said that we cannot take the second mortgage out with them as it would be considered 100% lending. From reading posts on this forum I understand a buy to let mortgage is not considered when it comes to affordability but the application fees are expensive but I could save up for a couple of months for the £2000. Alternatively I could remortgage on a residential mortgage then get consent to let although I am aware that this might be short term. We are looking at properties around £200000 and £250000 would be the absolute maximum. Is this scenario worth considering?

On the other hand we could carry on as we are for a couple of years (We are in the front room bedsitting whilst our daughter has the bedroom - we have managed like this for about 2 years) or rent out our flat and rent something bigger.

I do apologise for the long post and I would really appreciate your
advice.


Many thanks in advance.

Wh05apk

Will HSBC really allow you to remortgage to 80% as a buy to let?

Your rate is very good, so you should try to stay with your lender, porting that deal to a new property if possible.

Unless you really want to keep the flat, I woudl sell, and start again, you would then have about £70k to put down meaning you would be under 70% LTV so could get some decent rates.

Poorlass

Thank you for your response Wh05apk, your advice is much appreciated.

I think the rate is very good too and am glad now that I did not fix. When I spoke to HSBC yesterday they said they could offer 80% LTV on BTL and up to 90% on residential. I spoke to Hallifax this morning and got an agreement in principle on the second mortgage and they will lend up to £280000 (3.49% variable) so your advice on selling is something that we will consider in order to get a better deal although we still want to stick to our original budget. I will dig up my mortgage paperwork and check what the terms are on porting. I cannot imagine they will agree as they have tried to get me onto different deals in the past as their promise to always be only 1% above the bank of England base rate is currently not working in their favour.

Thanks again.