Help with how to balance mortgages

christm_2

Hi

Hoping for some help here. At the moment we have a lovely house but since our introductory deal has expired, we are really struggling with the payments.
Our current situation is:
We have a 3 bed semi detached house which is probably worth around 160k (165 on a good day). We currently have 145k left to pay. Our mortgage payments are £1023.

Due to the amount outstanding compared to value of the house, it's difficult to get a good remortgage.

I have recently inherited a small flat. Due to the poor market, I was thinking about renting it out. I'm told it would get around £400 per month (I'm assuming I'll be left with around £300 of that once all insurances etc are paid). It needs a small amount of work done to it but has no mortgage and is valued around 60k.

My latest (potentially) hare brained scheme is to take out a buy to let interest only mortgage of 26k on the flat. Use the 6k to do it up and the 20k to plough into my own mortgage. This would allow me to get a better deal on my current mortgage.
Just using basic moneysupermarket search engines for ballpark figures show that my payment on the flat would be around 65 a month and my new mortgage if I did that would be around 600 a month.
Even not taking into account the potential 300 rental income, this would drop my overall mortgage payments from £1023 to £665.

Is there a massive flaw in this plan that I've not spotted or does anyone have any other thoughts on how best to juggle things to lower my monthly outgoings?

Thanks

Martin

DannyboyMidlands

Why not sell the flat and pay off a large chunk of your mortgage, dropping your payments to around £300pcm?

christm_2

Sorry, should have said - I'm going to share any future profit in the flat with other family members (long story). So in short, I will take any rental income but at point of sale, will only retain 1/3 of the selling price (which would be around 20k),

So selling in full to pay off mortgage isn't an option.

Martin

kingstreet

Rate and outstanding term of current mortgage?

Thrugelmir

christm wrote: »

Just using basic moneysupermarket search engines for ballpark figures show that my payment on the flat would be around 65 a month

How do you arrive at this? Seems far too low for a BTL interest only mortgage.

christm_2

I'll get full details on interest etc and post them.

I just put in for a BTL interest only mortgage on the website for 26k on a 60k property and that's what the search results said.