Remortgaging Options in a CTL...

owitemisermusa

Hi guys,

Need some guidance.

Current fixed rate ends in a few months for my former home.

Have Consent to Let (CTL) in place and called up to see what was available with my lender.

Good rates for existing mortgage customers (2yr Fix) so was very optimistic that I could finally enjoy the low rates that the whole world and its brother have been enjoying.

To my surprise, I'm not eligible for any of the current products, I'd have to move to a BTL mortgage or stay on the SVR on my residential mortgage with CTL.

Lender's SVR is around 3.9% but BTL rates are higher (4.2 - 4.7%) and their computer valuation is shocking meaning that I wouldn't even meet the LTV threshold for a BTL mortgage.

Doubly disappointed as even with the SVR, my mortgage payments are not reducing as significantly as I expected.

Options? Thanks.

Thrugelmir

owitemisermusa wrote: »

To my surprise,

CTL is only a temporary arrangement. If you are letting your property as a business then expect to pay commercial rates. This has always been the case. Nothing new.

kingstreet

owitemisermusa wrote: »

Hi guys,

Need some guidance.

Current fixed rate ends in a few months for my former home.

Have Consent to Let (CTL) in place and called up to see what was available with my lender.

Good rates for existing mortgage customers (2yr Fix) so was very optimistic that I could finally enjoy the low rates that the whole world and its brother have been enjoying.

To my surprise, I'm not eligible for any of the current products, I'd have to move to a BTL mortgage or stay on the SVR on my residential mortgage with CTL.

Lender's SVR is around 3.9% but BTL rates are higher (4.2 - 4.7%) and their computer valuation is shocking meaning that I wouldn't even meet the LTV threshold for a BTL mortgage.

Doubly disappointed as even with the SVR, my mortgage payments are not reducing as significantly as I expected.

Options? Thanks.

Lenders such as Halifax and Nationwide routinely charge higher rates above SVR for CTL. Halifax, for example, offers three year fixed rates at around 6% with £1,000 fee. Nationwide loads the rate by either 1% or 1.5%, I can't remember which.

If you are being left alone on SVR I suggest you are one of the lucky ones. You won't be offered one of the prime residential products while your home is not owner-occupied.

holly_hobby

As the property is let, a remortgage would be on a buy to let basis.

Halifax are, as stated above, charging you semi-commercial rates (unregulated borrowing), they are permitted to do this, as once you moved into CTL waters you were effectively operating os of your original residential mge T&Cs (albeit with the lenders tacit and temporary agreement).

Unfortuantely, there is no option, accept Halifax's offer or seek an alternative lender and lower rate (subject to status and criteria) under a dedicated BTL mge arrangement.

Hope this helps (if not music to your ears !)

Holly x

owitemisermusa

Thanks very much for your help guys.
I appreciate your input.
I kinda thought I was stuck with the (favourable) SVR as the options are really to go for a proper BTL mortgage with its associated costs.
Glad that my lender didn't insist on forcing me into BTL terms. Grateful actually. My lender says CTL is still in place, phew!
I guess I need a proper valuation to see where I stand should I have to BTL it.
Thanks.

owitemisermusa

Thrugelmir wrote: »

A link for you. Ignore the $ signs. Numbers are numbers.

http://www.calculator.net/mortgage-amortization-calculator.html

Thanks for your link to the mortgage payment amount calculator on another thread.

I finally figured out why the SVR's monthly repayment was higher than expected.

The remaining mortgage term is 18yrs whilst I had been comparing other rates using a term of 25yrs!

Thanks again.

Now to figure out if it's worth increasing the term somehow to reduce payments and make this letting malarkey more sensible economically..

EMac_2

If the mortgage is on a repayment basis and your priority is to reduce your monthly payments it maybe worth considering taking the hit by moving to a buy to let mortgage on a interest only basis. This would depend on your future plans, i.e. any plan to move back in, and whilst I am NOT recommending a mortgage on the 'never never' this may suit your short term needs. The need to repay capital is not so vital on a B2Let as on a residential mortgage. At the end of the day we all need somewhere to live so if you plan to move back at some stage you dont want to find yourself with a big outstanding mortgage and few years left topay it back. Best of luck

owitemisermusa

EMac wrote: »

If the mortgage is on a repayment basis and your priority is to reduce your monthly payments it maybe worth considering taking the hit by moving to a buy to let mortgage on a interest only basis. This would depend on your future plans, i.e. any plan to move back in, and whilst I am NOT recommending a mortgage on the 'never never' this may suit your short term needs. The need to repay capital is not so vital on a B2Let as on a residential mortgage. At the end of the day we all need somewhere to live so if you plan to move back at some stage you dont want to find yourself with a big outstanding mortgage and few years left topay it back. Best of luck

Thank you Emac. Great advice, I had a similar dilemma when I moved out years ago, decided to keep it on a repayment basis for the fixed term and I'm kinda glad I did. I have some equity, not much according to the 'computer'. I think the balance is at a level where I might be able to 'risk it'. Do BTLs require a repayment vehicle for an interest-only arrangement?

I have 3 months to decide and your advice has been invaluable.

Typhoon2000

No BTL do not need a repayment vehicle for an interest only mortgage. The owner won't be losing the roof over his head if he couldn't repay the mortgage at the end of the term like someone on a residential mortgage on their own home.