To Remortgage or Not to Remortgage - That is the Question

jcrpage

Hi all,

I have a main residence in which I have lodgers (married couple, one of whom is first cousin). I am in the military and away a lot so it works out well all round. I have had the property for almost two years now and am on a life time tracker 2.99% above base.

I was thinking of remortgaging to a fixed rate deal so that I know exactly what my outgoings are going to be over the next few years but I am also thinking of buying another property in 2-3 years time which would become my main property and the current property would become BTL.

Therefore, to avoid fees I am inclined to stay on my current mortgage for the next few years and then work out what to do when it comes to buying a new place. I have 75% LTV but could prob push it to 70% if it helped.

Do I remortgage to another tracker, a fixed rate or wait it out and see whether I am going to buy or not. From quick property valuations on-line my property has roughly held its value at £188,000. I may consider releasing some of the equity in my current property to get my new place (which I will prob also get a lodger in) even though I would prefer not to, believe it works out better to have equity in main residence to offset tax. Thoughts and advice really appreciated, it will be my first foray into the BTL world.

kingstreet

Are you thinking of a product transfer with the same lender or a remortgage, which is a change of lender for a new deal?

If the latter, be careful. Not all lenders allow servicemen to let on residential terms. Some would insist on you changing to a less attractive buy to let (BTL) product.

As to your rate options - you're going to have to decide your priorities. No-one can decide them for you. Do you want lower cost or certainty of payment?

jcrpage

Thanks Kingstreet, I think my biggest dilemma is that if I buy a second property in 2-3 years which will become my main residence I would have to change the mortgage on my current property to BTL. My priorities are cheaper repayments but I'm also wary of product transfer fees. If I did change my mortgage it would be to another lender as I don't think I could get a better deal with my current lender.

HappyMJ

jcrpage wrote: »

Thanks Kingstreet, I think my biggest dilemma is that if I buy a second property in 2-3 years which will become my main residence I would have to change the mortgage on my current property to BTL. My priorities are cheaper repayments but I'm also wary of product transfer fees. If I did change my mortgage it would be to another lender as I don't think I could get a better deal with my current lender.

You do not always have to change a residential owner occupier mortgage to a buy to let mortgage you can get consent to let. That permission will usually be given if you have enough equity.

somethingcorporate

HappyMJ wrote: »

You do not always have to change a residential owner occupier mortgage to a buy to let mortgage you can get consent to let. That permission will usually be given if you have enough equity.

This would unlikely be a long term option. It tends to only be for a short period and is at the discretion of the lender (as are the renewals when they come around).

It should not be viewed as a long term alternative to a B2L product since no lender will grant it indefinitely but could certainly be the cheapest option for the first year or two if the lender permits.