BTL remortage for debt consolodation

cmj306

Hello


Not sure if this is the best thread to post on, but I'm trying to get myself out of a hole...



Due to various life things, I've accumulated a big chunk of personal debt. It totals nearly 50k, which is a huge figure and I'm not proud of myself but that is where we are. As things stand I am barely staying afloat, partly because the repayments total over 1k a month.


I've got a BTL property which I would like to re-mortage to pay off some of it, hitting the worst debts first. If I could borrow an additional 25k (ie. half the debt), I could clear the highest interest stuff, and about half my monthly payments. I can then focus on clearing the others off.


Is this something that's actually possible? Of course it doesn't help my credit score is now pretty rubbish.



The tenants in the BTL have been there several years and have indicated they wish to stay for another 2 years at least.



Any advice would be appreciated!

MortgageMamma

You need to give us some figures to work from

What is your income?
Do you own your own home as well at the buy to let? If so how much is it worth, what is buy to let worth? what is mortgage outstanding on both properties?

Don't rush into this without taking expert advice. Lenders are quite picky about debt consolidation and you need to get the right lender first time if your credit report is impacted badly.

When you speak to a whole of market mortgage broker, you will need to have your credit report to hand. Do you have copies of your experian and equifax reports?

MM

ACG

Before you tie in to a new deal on the BTL, are you aware of the tax changes that have progressively got worse over the last couple of years?

You may find that putting another £25k on your mortgage in addition to the tax changes makes it no longer viable. You may find you are hit with a big tax bill in the next month or 2?

cmj306

Income (besides the BTL) is 48k before pension, childcare vouchers, and tax. I think it works out to be around 41k taxable per year. BTL income is around 9k, before various costs are deducted. The last tax year was close to but just under the higher rate.


Own the house I live in with partner, it's got a mortgage of 240k left. Bought for 270k but we've done various improvements so I'd say it'd be worth closer to 310. Zoopla reckons 340 but I'd take that with a large helping of salt. We are still tied in for another 6 months or so.


BTL property has 90k mortgage and was valued at 270k a few years ago, given the market I'd probably guess closer to 260k now.

MortgageMamma

Sorry for the late reply - busy at work

You have the equity and the means to raise the additional capital to repay your debts, and it would be possible to do it, however, you need to consider how you feel about making unsecured debts into secured debts and consider that you will be paying them off over a much longer term and will pay more interest on them.

You need to figure how you and your partner feel about that and if its worth it to relieve your current financial pressure.

Not encouraging you one way or the other but if it made you feel better you could make overpayments on your mortgage to reduce the overall interest you will pay. You could use your dividends annual or make regular overpayments by increasing your direct debit payment to the lender.

Thrugelmir

cmj306 wrote: »

BTL income is around 9k, before various costs are deducted.

Not a particularly high income on £270k of asset. With personal debts of around £50k. Perhaps time for a total rethink of your personal finances. While you've the opportunity to control the situation. A personal mortgage of £240k also leaves you exposed to a change in fortunes.