Virgin BTL mortgage and Newcastle BS residential mortgage

M0ney

Hi,

I am facing redundancy at the end of April and just wanted to know what my options are. I haven't spoken to the lenders yet, I just wanted to check on here before I raise any red flags with the lenders....

I'm wondering if either of these lenders are likely to allow me to pay interest only for any amount of time given my employment circumstances.

Virgin (BTL)....5 yr fix ending Dec 2019 at the time of taking the mortgage I borrowed £63k against a property value of £90k - now owe around £58k.

Newcastle (residential) 2 yr fix ending Oct 2017 at the time of taking the mortgage I borrowed £104.5k against a property value of £110k - now owe around £104k.

M0ney

Nobody able to offer an opinion here?

silvercar

I doubt there is justification of allowing a reduction on a BTL, after all the tenants should still be paying their rent. Though there is a tax justification for BTL mortgages being interest only.

M0ney

Thanks, I'm just wondering if anyone is able to say what type of stance each of these lenders may take when a borrower is facing redundancy and asks for a move to interest only.

Of course the justification is that changing a BTL from repayment to interest only allows the person to cut their overall outgoings in order to extend the amount of time before he/she is likely to run into financial difficulty, it seems to me that it is in the lender's interests to assist somewhat with this, within reason.

AnotherJoe

I would make different arguments to the different providers.
1. Move to IO on BTL is a tax measure since you can offset the tax against rental income.
2. Move to IO on residential mortgage is due to temporary financial issues.

M0ney

OK thanks, do you think they would be in any way receptive to my request?

M0ney

Anyone else able to contribute here?

silvercar

M0ney wrote: »

Thanks, I'm just wondering if anyone is able to say what type of stance each of these lenders may take when a borrower is facing redundancy and asks for a move to interest only.

Of course the justification is that changing a BTL from repayment to interest only allows the person to cut their overall outgoings in order to extend the amount of time before he/she is likely to run into financial difficulty, it seems to me that it is in the lender's interests to assist somewhat with this, within reason.

Many BTLers plan to sell to repay mortgage, so there is never a need to make capital repayments.

It should be a fairly reasonable request to move to interest only for tax reasons. No harm in asking, the main reason for refusal may be if the lender feels the LTV is too high.

M0ney

OK thanks, I'm currently sitting around 65% LTV. Is this likely to be looked at as too high?

My thinking was that their main objection to the request would be that I fixed for 5 years only just over a year ago. It's actually the end of 2020 my fixed period ends not 2019 as I said in the original post. Is this not likely to be an issue?
Just for background, I've not missed any mortgage payments but I did take a payment holiday in December which is something Virgin allow you to do provided that you have made 9 consecutive payments and are up to date.

M0ney

Thought I'd give this one one last bump up the board for anyone who might have some more input....

Thrugelmir

You need to speak your lenders. The fact that you've already taken a payment holiday recently suggests that your finances are not good.