Buy-to-let - tough choices..
Your position depends upon how much deposit you initially put down on the house three years ago.( I presume it's 3 years). With luck it will have increased a little in value but possibly lost that with the current situation, so maybe you could sell it for what you paid. If that's the case you won't loose out unless you had a minimal deposit. Get an Estate Agent to tell you and search the internet for prices of similar properties.
But-to-let mortages are increasingly requiring a 20% or more deposit. (Rates are better the more you can put down)If you put down less than 20% when you bought the property and the current value is the same then yes you have a problem! If you only require a loan of say 75-80% I think you will still have some choice. I re-mortgaged three properties earlier this year with no problem.
Make sure you are charging the going rate to the students, rates have increased a little in my experience. Just do your sums properly, if the rental exceeds the mortgage then you should be fine. Ideally you want to clear £200 a month to make it worth while, but I guess your main concern is not to make a loss.
A word of caution: beware of the fees and don't go to a mortgage advisor who charges a fee/percentage of a mortgage, they all get paid my the lender as it is. The advice/work done should be free to you, it is for me.
And finally if you do have to sell at a loss at least you won't have any capital gains tax to pay! Not desirable I know.
Good luck.
Wed, 08/10/2008 - 22:50
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Hi Joanee,
I personally do not think you have too much to worry about. When your fixed rate comes to and end, you will automatically revert to the Lender's SVR, which may actually make your payment less than what you were paying on the fixed rate.
Failing that, you can ask your lender for a "product transfer" to another fixed rate. This is a very straightforward process and the LTV of your property does not come into the equation. They just switch you onto another product. There are usually some fees involved, but it is the most hassle-free way of doing things.
V.
Wed, 04/03/2009 - 14:44
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My partner and I are retired, and we own two properties in York. One is the family home which is mortgage-free, but another is by the university, which we let out to students during term time. We took out a fixed rate mortgage for £150,000 three However, we have become quite concerned that when our mortgage deal comes up for renewal next April (we took out a 5% fixed-rate), we will be forced to either sell up at a loss, or take some of our capital out of the family home and put towards it. What should we do? Any advice gratefully received...