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Longer or shorter term mortgage - rental property
accountingbod
Posts: 292 Forumite
Good morning all
Just a quick poll for all you mortgage savvy money savers
I have a rental property that i rent out for £795.00 per month.
At the moment, after expenses, we put about an extra £50 a month towards the pot for service charges, insurances etc...
It is now time to re-mortgage and we are just in the 75% bracket which means lower rates than we are on now. The current product is at 27 years remaining.
Would you either (On a 2 year fixed at 3.39%):
1. Remortgage on the current term of 27 years and have a reduced monthly mortgage payment and have enough extra to put towards service charges and insurances without having to spend from our own money.
2. Take out a 24 year loan and keep mortgage payments around the same as they are now but reduce the term by 3 years and so pay about an extra £1000 off the capital but still have to pay additional to keep the pot topped up for service charges etc...
I am all for reducing the mortgage as much as possible as want to be mortgage free asap so my first choice was to lower the term but am also thinking that knowing that the financial side is covered by the rent is also atrractive. If we were to have to put £50 aside for option 2, we could do this with option 1 as an overpayment but have the flexibility of lower payments if we needed it.
Hope that makes sense! :rotfl:
It did to me once upon a time.
Happy to give more info if interested.
Thanks
Just a quick poll for all you mortgage savvy money savers
I have a rental property that i rent out for £795.00 per month.
At the moment, after expenses, we put about an extra £50 a month towards the pot for service charges, insurances etc...
It is now time to re-mortgage and we are just in the 75% bracket which means lower rates than we are on now. The current product is at 27 years remaining.
Would you either (On a 2 year fixed at 3.39%):
1. Remortgage on the current term of 27 years and have a reduced monthly mortgage payment and have enough extra to put towards service charges and insurances without having to spend from our own money.
2. Take out a 24 year loan and keep mortgage payments around the same as they are now but reduce the term by 3 years and so pay about an extra £1000 off the capital but still have to pay additional to keep the pot topped up for service charges etc...
I am all for reducing the mortgage as much as possible as want to be mortgage free asap so my first choice was to lower the term but am also thinking that knowing that the financial side is covered by the rent is also atrractive. If we were to have to put £50 aside for option 2, we could do this with option 1 as an overpayment but have the flexibility of lower payments if we needed it.
Hope that makes sense! :rotfl:
It did to me once upon a time.
Happy to give more info if interested.
Thanks
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