Are £6500 Early Repayment Charges worth it to buy another property?

Neo_X

kingstreet, after your post yesterday, I immediately called Woolwich general helpline and asked about this and they did indeed say it was possible to port my rate across to the new property and avoid ERC and then just get a BTL mortgage on my existing property.

Slightly infuriated, I contacted my mortgage advisor and had a rather heated conversation as I was appalled that this option had not been suggested to me already and could have cost me £6500 unnecessarily.

I just spoke to him again this morning and this is his explanation: I originally wanted to put down 20% deposit taking advantage of a much lower interest rate than my existing mortgage. The saving in interest over the term of the mortgage would be much greater than the £6500 ERC. I haven't done the math, but I'm not sure if this would be true over the fixed term of 5 years which is a more realistic period to check as most people normally remortgage after their fixed term to get a better deal.

In any case, I actually advised him on Friday morning that I wished to change to 10% deposit where the rate on my existing mortgage is similar to the rate on a new mortgage. However, he didn't suggest porting the rate after that.

Anyway, the upshot is, he's now amending my application to port the rate across from my existing property to the new property thereby avoiding the ERC, and the BTL on my existing property will continue as normal.

kingstreet, I owe you a beer :beer:
melj16, Consent to Let was considered, but the underwriter wouldn't accept this as it's a temporary measure only.

Thrugelmir, your definition from thefreedictionary.com/leveraging continues, "as in buying securities on margin". My property purchase is not using leverage, far from it. If you think it is, I suggest reading further. I'm an investment banker and a day trader and I use leverage every day to spread bet with margin. That's leverage. To clarify, I can invest in something at 100x leverage and get £1000 for a £10 increase. Or, conversely, lose £1000 for a £10 decrease. There is no such leverage occurring here. I'm simply funding an investment with a loan. If the value of the property goes up by £10,000, I will only get £10,000 return. No leverage whatsoever.