Consentr to Lease - what to do next???

scoops82

Hi


I am not sure what to do for the best so any advice would be welcome. I have a flat that I paid £88k in 2006 but is probably now worth only £80k. The current O/S mortgage is £76.5k as the mortgage is interest only.


I have since moved into a house with my partner but as I couldn't afford to take a loss on the flat the mortgage provider agreed to a consent to lease for 3 years. I have a tenent at the moment who is no trouble and I the rent easily covers the IO mortgage payments.


Should I start by trying to overpay and bring the balance down - even though its unlikely I can reduce it enough to a 75% LTV BTL mortgage once the consent to let ceases. Will I be worse off by making payments now if I only have to sell the flat later?


Is a consent to let likely to be extended or are mortgage companies quite rigid on these rules?


Thanks in advance
S

Thrugelmir

The lender may well impose an interest loading. If the venture isn't profitable then it may be worth looking to sell up. Bite the bullet on the loss. Holding onto a poorly performing investment is human nature.

amnblog

Consent to let is a short term solution which is most likely reflected in your consent notification.


If you can afford to put together cash to pay down your mortgage to 75% of the value it is a good idea to do so.


This will give you the flexibility you need should you need to change lenders, or product at a later date.

scoops82

The flat I bought was to live in and wasn't intended to be a BTL.


I am currently paying a fee to revert my residential mortgage into a consent let, It generates about £2.5k income per year including all fees/charges apart from its only making IO payments.


My head tells me to try a and keep as much as its possible as It will provide a good rental income when I am older or If I can hold it for twenty years it should at least go up in value and its not costing me at the moment.


I'm assuming at the end of the 3 year consent to lease they can force my hand into finding equity to reduce the loan to an amount that I can get a BTL mortgage for or I would have to sell it - is that true?


At the same time the mortgage on my house is at a more expensive rate as I have 2 properties.


Any advice is welcome.
S