Santander mortgage with follow on rate

83dons2

Hi I am now on the Santander follow on rate tied to interest (going from 4.25% to 4.5% in July). I am thinking of changing the flat to a letting mortgage and letting out. I could stay with Santander but as I am on this basic rate am I free to shop around for the best letting mortgage out there? I would think that being in this higher interest rate would mean I have no penalties if I would want to go elsewhere at no extra charge to transfer the outstanding amount over? Is it best to use a mortgage advisor to find the best option going forward? I want to extend the term from 12 years to 20 years and possibly borrow 10k back from the amount due currently as well. Or is it better borrowing 10k from another source, not sure what 10k will add up to in total payments do I multiply by the interest rate and then by 20 for the term to find out the extra paid on borrowing 10k as part of mortgage?

K_S

@83dons2 If you're currently living in the property and don't own any other properties, then you need to first figure out the whole plan as that will determine your mortgage options.

Where will you live once you let the property?

If you're planning to buy another house and live there, then what you're looking at is called a let-to-buy where you remortgage the current residence to a BTL and in parallel buy another property to live in. This is fairly straightforward subject to picking the right lenders (eg: Santander do not accept applications where the applicant is remortgaging their existing residential property as a Buy to Let).

If you're planning to rent yourself or move in with family/friends then it gets much more complicated.

83dons2

I would be letting out my current flat and buying a second property to live in. I might stay in the letting property or with parents for a while until the second property is purchased. My first question is can I shop around for the letting mortgage given the rate I am on with Santander? Can I transfer what is owed to another lender without penalty? Can I then extend the current 12 year loan term to a longer term with the new provider. I am guessing just sticking with Santander for the sake of it is unlikely to get the best deal for the letting mortgage. i will speak to a mortgage advisor about the second property I would be buying and what deals are out there. Just wondered how tied in I was to Santander with the current mortgage.

K_S

@83dons2 If your fix has ended and you're on the Santander SVR, you have nothing keeping you to Santander and can remortgage to a BTL, on a different longer term, whenever you want.

There may be a fee to exit the mortgage but that'll only be a couple of hundred pounds at most.

83dons2

Ok thanks.