Remortgage advice please

happycamel_2

I could do with some advice as one of my mortgages comes off fix in March.

In summary:

We bought a house for £390k in May 2011
Mortgage 1) ported from last house, 4.99%, fix ends June 2014. 4% ERP. Paying 10% OP maximum so can be at circa £85k in March (I'll do the 10% in January).

Mortgage 2) £160k, ends March 2013, will go on SVR with Santander so 4.74% (up from 3.39%).

To complicate matters:
1) I'm on maternity leave, full pay to tend of March then statutory. Will probably resign Nov 2013 as cost of childcare too high. Am an accountant, salary £41k, now have 2 kids.

2) Husband has salary of £54k but £70k after bonuses (we do self assessment so can evidence this). Likely to be promoted in January.

3) Husband owns a house worth £160k, mortgage £120k. On a 10 yr fix with a Natwest, 7 years left to run. We let it out to a friend, no CTL and no tenancy agreement. Santander knew this and didn't care. Income declared on tax return. Tenant been there for 5 yrs. would sell and take the ERP hit if he left. We break even on the house.

4) we have approx £17k in shares I can get my hands on in January. £18k in an ISA. About £14k spare in a savings account. Another £3k in a S&S ISA.

I'd like our mortgage payments to reduce so our monthly expenditure is more affordable on one income. We can always overpay if we have spare money.

Options I've thought of:
1) ditch the fix and apply for 1.99% deal with 40% LTV but will tie up lots of our savings, new lender will have to be ok with the rented house and my mat leave and value our house at £390k

2) do an offset on loan 1 and wait for loan 2 to expire. But higher monthly payments even though interest/capital balance will change if we move savings in to an offset account. Stuck with Santander whose cost of capital is high. Once I'm unemployed will be hard to move to a cheaper provider

Which do you think would be best and any other ideas gratefully received.

happycamel_2

Bumping in case any one has a view on this. Is it likely we'd be accepted for a lower interest mortgage? How soon should we apply? Do I need to use a broker and if so, how much do they cost? Given we bought in May 2011 are they likely to use the value we paid or reassess?

Thrugelmir

happycamel wrote: »

3) Husband owns a house worth £160k, mortgage £120k. On a 10 yr fix with a Natwest, 7 years left to run. We let it out to a friend, no CTL and no tenancy agreement. Santander knew this and didn't care. Income declared on tax return. Tenant been there for 5 yrs. would sell and take the ERP hit if he left. We break even on the house.

More of a concern to the NatWest I would say.

Is letting the property profitable?

Is the property a drain on your cashflow?

happycamel_2

Yes, the other house is more of a concern to Natwest but I don't want to create problems by attempting to move the mortgage on our house and bringing it to Natwest's attention.

We're cash neutral on the house. If our friend moved out we'd sell it, it's more of a favour really and dates back to when DH moved in with me but didn't want to sell his place in case our relationship didn't work out. Friend moved in, pays us the mortgage cost, and 6 years on here we are.

Putting it on a BTL would make us have to increase the rent and we'd have a big ERP to find unless we just kicked out our friend and sold it, but he's covering the capital repayment so it's part of our pension planning now.

My main question in regards to this is whether a new mortgage company would investigate or flag the nature of the product he has with Natwest. We will declare the property, rental income etc. Thinking of moving to HSBC 1.99%.