The unwilling landlord journey

Fermerswife

Hi everyone, it's my first post here. :beer:

Backstory...

In October 2015 I bought my first home for £78,000 with a 100% interest only mortgage (in the days when getting a mortgage was easy). As luck would have it 5 months later I met my now husband and have since moved in with him to his mortgage free property (so lucky there).

By this stage though the property market had crashed so if I sold my house I wouldn t have made enough to pay off the mortgage so for my sins I rented it which is a whole other story.

Since I bought the property my income has increased substantially and I remortgaged 8 years ago to a 50% repayment 50% interest only. My income has increased again since then but two maternity leaves later I'm only getting back to the point of having some spare cash and not be saving up for something (I have no other debt).

So really I'm not sure where to start. I looked at a nationwides overpayment calc last night and got.really confused. If I made a £500 overpayment I would only pay £200 off the total repayment? Is that because of the interest only component? Could someone explain please? Or would I be better to try and get a new mortgage deal?

Details are as follows
Total remaining £70977
Interest rate 3.5% (high as renting out)
Initial deal £39,500 Interest £39,500 repayment
20 years left - repayment date 2038.

Thanks in advance!

FloppyDisk

Overpayments are in addition to whatever you have agreed to pay back, so an overpayment of £500 would mean a reduction of that amount to the balance.
Your interest rate is quite high, even for a BTL. I just got a 5 year fixed interest only with 60% LTV at 2.19%. Has the value of your house gone up at all? Do you really want to pay it off, what's your long term strategy? As a BTL you can still get a small amount of tax relief on your interest until 2020.

Lots of things to consider when it isn't a straight forward residential property.

Fermerswife

Old mobile sold on eBay! £100 in the bank today so I'm off to a good start!

Fermerswife

Thank you floppy disk. You're right it's tricky from a tax point of view too. The property is probably worth in the region of £65k at the minute. The area has declined since the bubble burst here so I'm not getting the standard of tenant I would like any more. My thought would be to maybe pay the mortgage down with a view to selling it in a few years. I have no idea why people actually rent property as there job it's such a headache!

FloppyDisk

You're not in a position to sell then, and although I'm a little confused by your dates, bought in 2015 but remortgaged 8 years ago? If you're in negative equity you've got no choice but to suck it up for a bit and try to get it to a better LTV to remortgage to a better rate asap. Just beware early repayment charges, which with a small mortgage might sting you quite quickly.

Good luck, you're in the right place for it!

Fermerswife

Thanks again floppy disk. Sorry I bought in 2005! Yes I see I'm on a bad rate but as you say my LTV is poor so pay some off then try and get a new deal. That's the plan then!

vetstudent

I read this thinking 2015, wow you have been quick to meet your husband and have 2 children lol

Good luck on your journey, how are you finding the tenants?

Fermerswife

Thanks vetstudent that would have been quick work wouldn't it! I don't see anywhere I can edit that post?

For a few years I had a lovely couple who were great then I had a bad run with one not paying for months and leaving the place a disgusting tip and another who just up and left. Hopefully my tenant now continues to pay the rent etc as I do look after the property not like some of these awful landlord stories you hear!