Consolidating Mortgages

loveka

Hello.

We currently have a BTL and a Holiday Let property, both with mortgages. I've worked out that if I were to shift the Holiday Let borrowing into the BTL I would save £300 a month.

BTL mortgage is £150k. House value is £500k. Rental income is £1850 per month. We've had the mortgage for 7 years. Lender is Santander

Holiday Let mortgage is £230k. House Value £550k. Income is £60k a year. So I need £230k to pay it off.

So is it sensible to borrow the £230k on the BTL and pay off the Holiday Let mortgage? I don't want to do it the other way round.

Our only income is from property as we are retired. I just want to know if this is something that would be acceptable to a lender and is it the right thing to do? Thanks in advance.

kingstreet

A £380k mortgage on a £500k value is a 76% LTV which will mean a higher rate than for your current plans.

£1,850 rent is unlikely to support a mortgage that size. As an example, The Mortgage Works would lend only £299k using a five year fix; or £308k on a 75% mortgage on a five year fix.

saajan_12

https://forums.moneysavingexpert.com/discussion/6652372/consolidating-mortgages

Why would it save £300 a month? Do you mean due to a better rate or tax relief on the interest payments, or something else?

Basically not clear if it even achieves what you're aiming for.

loveka

It would save £300 on the interest as the holiday let one is 5.6%. But I wasn't taking into account the higher rate with a bigger mortgage on the BTL. I would just like to pay it off regardless of any savings though. I want to retire to the Holiday Let property at some stage and would have to be mortgage free on it to do that.

Looks like it wouldn't be possible to get the funds anyway.

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/81856835#Comment_81856835

So your BTL mortgage is ~4% and holiday let is 5.6%? So you're calculating the difference ie 1.6% interest on the 230k holiday let mortgage?

• Can you even pay off the holiday let mortgage without penalties?
• Can you even increase the BTL mortgage at the same rate (if its an old rate, you may only get the current going rate on an increased borrowing)?
• If you can currently get a 4% loan, can you not remortgage the HL loan without shifting it over?

https://forums.moneysavingexpert.com/discussion/comment/81856432#Comment_81856432

Where LTV and affordability limits are an issue, in theory the bulk of hte HL mortgage could be transferred over to the cheaper BTL mortgage up to the max borrowing there, and the rest left on the higher rate on the Holiday let, and thus still saving most of the £300.

However the issues raised above still remain.

loveka

There would be a penalty if I paid the Holiday let off now, but the fixed rate ends in May.

The btl is currently on a low rate. It ends in March so I would get a new fix then. Maybe my sums were wrong, but the cost saving isn't my primary reason.

I just want to pay the Holiday Let off really as I'd like to live in it in the future and for the timing of that to be flexible.