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Mortgage/BTL quandary

edited 30 November -1 at 12:00AM in Mortgages & Endowments
6 replies 311 views
BrodiebobsBrodiebobs Forumite
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edited 30 November -1 at 12:00AM in Mortgages & Endowments
This could have gone across multiple forums but as the mortgage advice is the most important posted here.

We're in a very fortunate position due to OP'ing & living frugally to have a home with around 50% LTV. We also have a rental property at around 75% LTV which is on a variable rate.

Our residential mortgage deal is up shortly and weighing up our options as ultimately we are aiming for FIRE and want another rental property at some point in the near future.

As a rule I'm quite risk averse but i'm trying to go head over heart and do whats best for us long term financially. As I don't want to end up asset rich cash poor for want of a better phrase!

Thinking of perhaps getting an IO fix for our residential mortgage for 5 years, which would free up around £500 a month on payments (as well as the £250pm we currently OP across both) to pay down the rental so the LTV is better and can remortgage onto a repayment before rates increase.

Then save a deposit for another BTL. When the 5 years is up at that point depending on the rates at that time either start OP'ing or getting a repayment mortgage.

We obviously have the option of remortgaging to release equity but have agreed that's something we don't want to do.

Were in our mid-thirties,have emergency easy access and long term investment savings.

In our position what would you do... and what good rates are out there for residential mortgages with low LTV's?

Replies

  • dimbo61dimbo61 Forumite
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    First getting an Interest Only mortgage on your own home maybe difficult.
    Rates have never been so low so get signed up to a new fixed rate deal.
    You could speak to a Whole of market broker and find new deals for both properties.
    We have an offset mortgage residential.
    You maybe able to increase the LTV on your home to say 60% ( so still getting the best deals) and paying down some of the Debt on the BTL hopefully to 60% LTV ( hopefully getting the best rates)
    Look for BTL deals that allow 10% overpayments.
    Build up savings in the Offset pot to provide the monies needed for the next BTL
    Speak to an expert who can look at the BIG picture !!! Income, pensions, age, kids, savings etc
  • dimbo61dimbo61 Forumite
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    "are aiming for FIRE"
    What is all that about ???
    BTL on the variable rate ( Very poor)
  • edited 15 January 2020 at 12:00PM
    BrodiebobsBrodiebobs Forumite
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    edited 15 January 2020 at 12:00PM
    dimbo61 wrote: »
    "are aiming for FIRE"
    What is all that about ???
    BTL on the variable rate ( Very poor)


    Financially Independent Retire Early (FIRE).

    the variable rate on the BTL is actually a good rate because we have consent to let, not on a BTL mortgage. Its currently 1.79%.

    I did think about offset but (perhaps wrongly) thought they were non-existent these days.
  • ThrugelmirThrugelmir Forumite
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    Interest on the BTL is tax deductible. Whereas it's not on your residential property.

    How long does the 1.79% rate last?

    Where's the capital funding coming from to purchase another BTL?
    “Far from seamlessly assimilating new ideas into our existing belief framework, research shows that we actually tend to get more firm in our cherished beliefs when those beliefs become challenged.”
    ― Daniel Crosby
  • BrodiebobsBrodiebobs Forumite
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    Thrugelmir wrote: »
    Interest on the BTL is tax deductible. Whereas it's not on your residential property.

    How long does the 1.79% rate last?

    Where's the capital funding coming from to purchase another BTL?

    Its variable, so until we get another BOE rate change.

    Capital funding will be be savings we accumulate over the next few years for the deposit and a BTL mortgage.
  • dimbo61dimbo61 Forumite
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    There are a couple of lenders Barclays, YBS come to mind that do Offset mortgages.
    We are building up funds to pay for Big projects
    Do not let the Tax tail wag the Dog.
    Get the best mortgage deal/Rate first
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