Landlord - Interest Only or Repayment?

Lisa1978

I let out a property and have consent to let.


The property is in negative equity, worth approx. £75-80k and mortgage balance is £88k, made up partially IO and partially repayment.


1) £10,203 - IO
2) £62, 153 - IO
3) £16,324 - Repayment


All off the above is on a 2 year fixed to July 2020 at 3.29%.


My query is - would I be better converting all to repayment now to get the mortgage paid off? Term left is 13 years but my thoughts are to keep the property as towards my retirement?


Monthly payment currently £330. Rental income is £475. I can afford to put more towards the mortgage.


I am in N.ireland hence the property price!


Thank you.

getmore4less

How much can you overpay the repayment part without penalty?

Ifyou got a void could you still pay the mortgage?

djpix99

Landlord's generally go for interest only mortgages to keep out-goings down and cash-flow up(amount of money left over each month after expenses). However in your situation a repayment sounds like the best option as you at least want to get the mortgage to a point where you have 25%+ equity so you then have a good selection of re-mortgage options available to you in the future.

foxy-stoat

As long as the rental payments are 25% higher than the new mortgage payment you shouldnt have an issue.

As your only making £145 a month before income tax and expenses it doesnt look like a good investment at the moment. Are prices going up or down in that area?