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Hi. One of my properties are due to be fixed back in on around 2 months. Looking to remortgage (interest only) with TMW on a 5 year fixed and the following deals are available, I know which one I'm going to choose but I was wondering what deal all you would go for.
Rent for this property is £500Deal one
£121 per month
£1995 arrangement feeDeal two
£159 per month
£995 arrangement feeDeal three
£181 per month
£0 arrangement fee
Deal 1 works out at a total of £154.25 per month over the 5 year period
Deal 2 = £175.58
Deal 3 = £181
So deal 1 is the best value.
Also, the arrangement fee is tax deductible and the interest is not. So deal 1 wins on all accounts!
That’s not correct, Section 24 states that incidental costs of obtaining the loan are also not deductible, the arrangement fee would be caught by this.
You haven't said what your current LTV is.
Lets assume it's 75LTV and that you have a 25% equity, if you think that your property value might increase by at least £8000 (£1995 x 4 (multiplier of 4 because we assumed 25% equity)) over the next 5 years, then go for deal one and add the arrangement fee onto the loan.
The £8000 calculation is just so that you don't have to topup your mortgage in 5 years time if you still want the same 75LTV deals. Also, I assumed your mortgage at 25% equity, if you have 40% equity then use multiplier of 2.5 i.e. whatever it takes to make the equity into 100%.
Deal 1 ( if you are expanding your portfolio )
I used to always max my leverage by taking the lower rate and adding the fee on
And use the £3600 saved over 5 years to spend on say a new kitchen & bathroom after 4.5 yrs
That adds value of double to say £7,200 for when you remortgage after 5 years
Then over time if you had a portfolio of say 20 and did Deal 1 on all and saved the extra cash......
You can then after 2 years put 25% down on a 100K property
So you get in effect a free house free CG and free rental income on that house by choosing Deal 1
Compound everything you can and time will do the rest
Jonathan Clarke. http://www.buytoletmk.com
Lots of information to consider when obtaining a mortgage such as personal circumstances, the property itself, LTV of the mortgage, your strategy, other properties you own, whether you are a portfolio landlord or not ? The list goes on.
If you want to see what the market can offer you then please get in touch and see where we can help.
Currently I can see a 60% LTV deal at 2.29% with no arrangement fee, free valuation and free legals.
You can contact me via Direct Message, or 07788 219647 or call the team on 01206 654444 for personalised quote and advice
The £0 fee products are always attractive but once you get to to know them. They are not as good.
Deal 1 - The 2.1% (well 2.09%) mortgage as the true cost over the 5 year period is lower. Even if have to pocket a fee, works out better over 5 years.
You seem to be looking at 65% LTV BTL range. If we expand to the whole of the market. Then I would not go for Deal 1 then as there is a better like-for-like mortgage available.
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________