Not sure which mortgage deal to go for

therealhyper · 11 February 2017 at 10:06PM

Hello,
My current mortgage deal has come to an end and I have couple of options, not sure which one is best.

I have £80,000 left to pay off my house, which in today's money is worth well over £400,000.

My bank states as my current deal has finished, I can pay off as much as I would like to with no penalty.

I am in a good position to either:

1. Pay the full amount and become mortgage free.

2. Pay off a large sum to reduce the mortgage down to £60k and go on a new deal (bank has currently offered 2 year fix, no product fee at around 2.2%) and use some of my money to buy a 2nd property (BTL). I have looked around the internet and there are better deals on new mortgage deals which have better interest rates but they have expensive product fees attached (between £1,000 to £2,200+).

What are your thoughts ?
Q1. Go mortgage free ? Are there any downsides here ?
and if I was to buy a 2nd property, would it be classed as a BTL ?

Q2. If I go down the BTL route, can I use my current property as leverage to get a better deal ?
and does the 2.2% interest deal on 80k (no fee's) sound like a decent deal ?

Any tips/suggestions appreciated ?

Thanks

nicholbb · 11 February 2017 at 10:56PM

Mortgage or no mortgage you are paying 3% extra stamp duty for second home. Also you'll be paying capital gains tax if you sell it.
Letting a home is far less profitable than it was, you need to investigate more.

I'd say speak to an IFA about your situation. You will have a fair bit of disposable income each month, you used to be able to do some property buying wrapped in pension.

Look on this site for comparison for mortgage but with such a low LTV you are in a good position.