Advice on re-mortgage/change of product

birdsfoottrefoil

Hi everyone! 

I’m just looking for some advice/a check on my plan.

I currently have permission to let my property from my lender with the agreement that when I’m at re-mortgage time I move to a commercial mortgage. My deal ends on the 1st April 2026. 

To do up my house I accrued about £28,800 of debt. I’m paying that off and now down to £27,300ish. I’ve worked out I can pay it down by between £1000 and £1500pm depending on bookings. My income is currently £3,300pm before tax etc plus a £150pm addition as I’m currently “acting up” (this is likely to finish in spring).  My debt is split across 4 CCs and £4000 unsecured loan. I pay about £700pm in direct debits towards them but the minimums would only be a total of £540pm. I then pay additional amounts towards the debt through the month.

I do have a £100 over draft on my current account (same provider as mortgage) which I have previously used but plan to stay out of it going forward.

I’m concerned that my bank (a small regional building society) will look poorly on my debt, though I can explain it; so my plan is to get it down to as near too £20k by re-mortgage time and not use my overdraft. I would like to get it lower but I don’t think with the time of year and Christmas that is possible. 

I have had my mortgage 6 years and except the agreed break during Covid when I was furloughed (it was a national scheme and it’s not meant to affect throngs) I have always paid my mortgage.

So any views on am I too worried or should I be more worried!!!

birdsfoottrefoil

Just to add my bank is happy with the income from letting compared to value (I had to get a letter with a predicted amount from a holiday let company). It’s just my debt I’m worried about, I haven’t spoken to them about it but I’m aware they’re a bit funny about these things. 

kingstreet

To summarise, you want to know if your particular lender will remortgage you to a BTL from a residential?

Frankly, only your lender can tell you if they offer that. BTL affordability is normally confined to rental income but any answer would be purely speculative. 

birdsfoottrefoil

No, my lender has confirmed that they will accept my property for a commercial mortgage based on the income estimates of a holiday let company(as it’s a holiday let as mentioned not a buy to let). I am asking what should I focus on with my finances to make that side “more appealing”. Is there a general view on debt to income or is it based on outgoings? Or are these things less interesting to banks generally with commercial mortgages? 

kingstreet

Ok. Does your lender have a BTL mortgage affordability calculator? If so, does it ask questions about your personal debt, or just about the property, rent etc? That is going to give you an insight.

BTW a BTL mortgage isn't really a commercial mortgage. That would be used to purchase commercial property.