Mortgage Question
Discussion
We currently rent and are saving with a view to Buy in 2017.
The GF has a rental property that currently brings in £600 per month after fees and min mortgage payment. Currently she is paying off as much as she can each month circa £2k, with the mortgage value Sat at £32k ish. If she continues at the current rate it will be paid off mid 2017 but she wont be able to save a deposit for our main house.
So is it better to carry on as is , or to put the £600 from the property towards paying its own mortgage and save the other money towards a deposit? current interest on the property is £48 per month.
Additionally will the outstanding on the rental be deducted from what we can borrow on the main property? The property is worth approx £180k.
She doesn't want to sell the rental as it's effectively her Pension, due to having a rubbish company pension.
Thoughts?
The GF has a rental property that currently brings in £600 per month after fees and min mortgage payment. Currently she is paying off as much as she can each month circa £2k, with the mortgage value Sat at £32k ish. If she continues at the current rate it will be paid off mid 2017 but she wont be able to save a deposit for our main house.
So is it better to carry on as is , or to put the £600 from the property towards paying its own mortgage and save the other money towards a deposit? current interest on the property is £48 per month.
Additionally will the outstanding on the rental be deducted from what we can borrow on the main property? The property is worth approx £180k.
She doesn't want to sell the rental as it's effectively her Pension, due to having a rubbish company pension.
Thoughts?
Thoughts?
- It's extremely low LTV, why hammer that mortgage to the detriment of saving for the deposit of your residential? Just let the BTL do it's thing and pay itself off. Deposit is king for your purchase, an extra 5% here or 10% there can save you thousands.
- As long as the rent exceeds the mortagge payment sufficiently, lenders will ignore it for affordability.
- I assume you are aware of the additional 3% Stamp Duty you will have to pay if you buy your property jointly, due to already owning a property?
- It's extremely low LTV, why hammer that mortgage to the detriment of saving for the deposit of your residential? Just let the BTL do it's thing and pay itself off. Deposit is king for your purchase, an extra 5% here or 10% there can save you thousands.
- As long as the rent exceeds the mortagge payment sufficiently, lenders will ignore it for affordability.
- I assume you are aware of the additional 3% Stamp Duty you will have to pay if you buy your property jointly, due to already owning a property?
AS I assume she has a normal resi mortgage on the existing property, she will need to convert that into a BTL mortgage and get a normal resi mortgage for the property she wants to live in. Rather than paying off the mortgage she is much better off saving as chunky a deposit as possible for the next purchase.
If by next year she has saved £20,000+ it will give her more options when wanting to buy property 2
If by next year she has saved £20,000+ it will give her more options when wanting to buy property 2
Current property is on a BTL mortgage.
With the value of house we will want buying solely in not an option. So we will be hit with the 3% stamp Duty...(damn)
Good to know it won't affect affordability so saving while while letting it pay for itself is the sensible option.
We should be able to get together a 50k deposit looking at £350k house so we can't use the Help to Buy ISA. (Grr) Stamp duty is a PITA though, might have to tap up the Parents to assist.
With the value of house we will want buying solely in not an option. So we will be hit with the 3% stamp Duty...(damn)
Good to know it won't affect affordability so saving while while letting it pay for itself is the sensible option.
We should be able to get together a 50k deposit looking at £350k house so we can't use the Help to Buy ISA. (Grr) Stamp duty is a PITA though, might have to tap up the Parents to assist.
Rangeroverover said:
How did you manage that, it seems to be almost impossible to get a BTL mortgage unless you already own another property that you live in.
I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
It's not impossible.I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
You just need a good mortgage broker
Sarnie said:
Rangeroverover said:
How did you manage that, it seems to be almost impossible to get a BTL mortgage unless you already own another property that you live in.
I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
It's not impossible.I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
You just need a good mortgage broker
Bertrum said:
Mortgage was taken out around 10 years ago on a 25 year lifetime tracker or similar at .5% above base. Sarnie would be proud.
Isn't paying it down a false economy at such a low interest rate.Edited by Bertrum on Friday 8th April 11:54
Put the money in a Santander 123 account and you get 3% (tax free with the new tax rules) and you pay about 1% on the mortgage. Free money!
ETA: Assuming an interest-only mortgage.
Edited by nyt on Friday 8th April 12:17
nyt said:
Bertrum said:
Mortgage was taken out around 10 years ago on a 25 year lifetime tracker or similar at .5% above base. Sarnie would be proud.
Isn't paying it down a false economy at such a low interest rate.Edited by Bertrum on Friday 8th April 11:54
Put the money in a Santander 123 account and you get 3% (tax free with the new tax rules) and you pay about 1% on the mortgage. Free money!
ETA: Assuming an interest-only mortgage.
Edited by nyt on Friday 8th April 12:17
nyt said:
Isn't paying it down a false economy at such a low interest rate.
Put the money in a Santander 123 account and you get 3% (tax free with the new tax rules) and you pay about 1% on the mortgage. Free money!
ETA: Assuming an interest-only mortgage.
Correct, However the GF simply hates owing money. She wants it Sub 30k (no idea why) which will be next month, then she will save. Put the money in a Santander 123 account and you get 3% (tax free with the new tax rules) and you pay about 1% on the mortgage. Free money!
ETA: Assuming an interest-only mortgage.
Edited by nyt on Friday 8th April 12:17
Then next year the wait for a house to come up for sale, as we have a specific requirement in a specific area in which there are only a few Hundred Suitable houses, meaning we literally have to wait for people to die!!
Bertrum said:
curlie467 said:
Haha, is she going to get twitchy owing 300k then when you do buy.
Yep. Her main criteria for a Mortgage will be the ability to overpay with no penalty.Sarnie said:
Rangeroverover said:
How did you manage that, it seems to be almost impossible to get a BTL mortgage unless you already own another property that you live in.
I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
It's not impossible.I have had clients who are living in rented or with family wanting to get a BTL mortgage always been impossible
You just need a good mortgage broker
Slaav said:
I think you will struggle to get a mortgage WITHOUT the ability to overpay within limits each year, penalty free. 10% was always the norm so do you really think you will over pay 30k+ each year?
So long as he takes a variable rate product he will be free to pay off as much as he likes.Slaav said:
I think you will struggle to get a mortgage WITHOUT the ability to overpay within limits each year, penalty free. 10% was always the norm so do you really think you will over pay 30k+ each year?
Its quite possible, if we don't have small people and I don't buy another race car. Gassing Station | Finance | Top of Page | What's New | My Stuff