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Consent to let & interest only- any pitfalls?
Soldierearth54
Posts: 231 Forumite
Hi,
I will soon be letting out my property and I am awaiting the paperwork to apply to change my mortgage to consent to let.
I am considering changing my mortgage on this rented property to interest only. Are there any reasons that this is NOT a good idea?
Any advice would be welcome from those with experience of this.
I will soon be letting out my property and I am awaiting the paperwork to apply to change my mortgage to consent to let.
I am considering changing my mortgage on this rented property to interest only. Are there any reasons that this is NOT a good idea?
Any advice would be welcome from those with experience of this.
0
Comments
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Most investors opt for interest only as this maximises cash flow, creates a larger buffer against leaner times (say if the tenant defaults) and allows you the flexibility to then pay off chunks of mortgage when it suits you, or to re-invest accumulated capital.
It is very hard to persuade a residential mortgage provider to change to interest only, and would usually require you to have substantial other investments with which to one day pay off the mortgage.
You can only know the position by contacting your lender as each case is unique so not point speculating about ifs and maybe's here.
Same with consent to let, it depends on your exact circumstances, equity and which lender etc etc, but consent to let is typically granted.0 -
Most investors opt for interest only as this maximises cash flow, creates a larger buffer against leaner times (say if the tenant defaults) and allows you the flexibility to then pay off chunks of mortgage when it suits you, or to re-invest accumulated capital.
It is very hard to persuade a residential mortgage provider to change to interest only, and would usually require you to have substantial other investments with which to one day pay off the mortgage.
You can only know the position by contacting your lender as each case is unique so not point speculating about ifs and maybe's here.
Same with consent to let, it depends on your exact circumstances, equity and which lender etc etc, but consent to let is typically granted.
Great thanks.
My current lender doesn't provide interest only so will look at moving.0 -
Buy To Let products are still widely interest-only based, mostly for tax reasons I guess.
Typically, you'll be able to borrow the lower of 75% of the property value and the mortgage amount from;-
rent = 125% or more of monthly mortgage interest assuming 6% per annum.
BTL is still pretty broker-centred, so a whole market broker will probably have more options than you can find direct.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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