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  • Buy-to-Let

    Next move...?



    I’m hoping some experienced investors and|or mortgage brokers will give me their thoughts on my next move….

     I now own 4 small terraced houses in Hull, all bought through my company. Two are on 75% LTV mortgage, two are unencumbered. I now want to refinance the two unencumbered ones.

    Both houses cost about £81,000, including full refurbs and all fees. One is already achieving £525pcm and the other should do the same, once the refurb is finished. They should both revalue at £90,000 - £95,000.

    First; I assume it’s obvious to refinance. Why leave money in and where else to put it? I’ll probably do the same as before. Then again, I may buy locally (I live in Bournemouth), to ensure some variation (that said, my guess is capital values are more likely to increase in the north east, now, than around me).

    Next, I’m pretty confident about long-term rental prospects. The houses have been done-up to a good standard and are in popular locations. I also have a good managing agent.

    As for mortgages, I’ve been offered the possibilities below (all assume £95,000 valuation).

    It seems obvious to me to fix for 5 years. Any thoughts?

    I don’t really want to use money now on fees, so I’m minded to go with the last option (5 years fixed at 3.76%).

    But I’m new to all this, so may well have missed something.

    Like I said, your thoughts would be much appreciated.

    Product

    Term

    Rate

    Fee

    valuation fee

    Payment

    total cost over product term

    Fixed

    2 years

    2.99%

    £713

    £430

    179.3

    £5,446.20

    fixed

    2 years

    3.40%

    £0

    £0

    201.88

    £4,595.12

    Product

    Term

    Rate

    Fee

    Valuation fee

    Payment

    total cost over product term

    Fixed

    5 years

    3.40%

    £1,425

    205.92

    £13,380.20

    fixed

    5 years

    3.65%

    £356

    £280

    217.8

    £13,424.00

    Fixed

    5 years

    3.74%

    £356

    223.17

    £13,246.20

    Fixed

    5 years

    3.76%

    £0

    223.25

    £12,995.00

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    Hi, Just a thought, do any of the properties have dss tenants, as this will reduce your choice of lender significantly


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    Hi.

    No. Woking people only.

    John

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    Those 5 year fixes look expensive!

    I looked at a 5YF with Natwest 75% LTV today and it was 2.79% inc. a £1k fee or 3.07% without.


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    Adam thanks. I'll ask my broker about it.

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    As you know - high fees best avoided unless loan is v high and spread thinly over amount and duration of fixed period.

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    Yes your table looks like typical company BTL rates. Whilst I see the NWest 2.79% but there is a better exclusive rate from NatWest too at the moment. So if that’s the way to go, ask your broker about the exclusive range.


    I think the key is what do you plan long term. You may be better reducing gearing across all your mortgages to get lower rates and increase profits. Alternatively if it’s refinance to buy and repeat, then you need to be conscious of fees. With small loan sizes, fees are always disproportionate. You need to consider your longer terms plans when looking at each mortgage.

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    Tax advisor and mortgage broker

    stuart@johnsonsca.com

    02039077022


    Hi there, I also invest in Hull in HU8 but have struggled to find good letting agents.  Can I please ask who you use?

    Many thanks.

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     Mine is not a letting agent, as such. He is someone I use to help me find properties, which he then refurbishers for me and thereafter manages. If it is still of interest to you, private message me your contact number and I will pass it to him.

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