Changing Mortgage

Discussion in 'Finance, Property, Law' started by ipaq, Dec 13, 2009.

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  1. Hi,
    after a bit of advice from the forum. I'm looking at changing my mortgage from a fixed rate to that of a flexable rate. However:

    1. As a serving soldier my primary residence is currently rented out, currently living in a quarter. I have a fixed rate mortage but its not a buy to let mortgage. The tenents moved in to my house after I took out the mortgage, at the end of my tour I was posted down south. Would this be a sticking point when chnaging to a new mortgage that is not a buy to let?

    2. Anyone know of any mortgage companys that would be happy with the above scenario that give competative tracker rates. The best I've seen thus far is 2.77%. I'm also after unlimted overpayments as well.

    Any help advice would be great, I'll be arranging a meeting with a mortgage advisor over the X-Mas period but always nice to go fore armed with info.


    Best Rgds
     
  2. You don'tneed a buy-to-letmortgage for your main residence. You will need to inform your lender before you rent it out, so you need to ask (and get confirmed in writing) that there is no objection to your doing this. Mortgage providers will be on the lookout to stop people doing unauthorised buy-to-let, but explanation that it's temporary move for Crown Sevice should be unproblematic. Always has been for us. Happy hunting
     
  3. You must tell your current lender that the house is let as you are a Crown servant and have been posted. The small print in your paperwork will tell you that.

    Presumably, you are coming to the end of a fixed rate mortgage. If that is the case, then you will be moved onto the standard (flexible) rate of and you will probably find that the rate you are paying drops because it is about 3.5%. That is the way in which the current market is working.

    There is a lot of discussion in the press about whether or not you should move to a fixed rate of about 5% which is where the market lies at the moment.

    It is likely that interest rates will remain low for a while. Only fix if you need the safety of a fixed rate.

    Caveat: My informed opinion only...

    Litotes
     
  4. Thanks for the info regarding mortgages etc. I'm currently on a 10 year fixed deal of 4.98% I've got 7 years left. However I can only pay around £4K a year in overpayments. I'd like to stretch this to £8K a year to get it paid off earlier but the mortgage company won't allow it; contract states 5% of total amount per year can be over paid.

    I've had a dig around and worked out if I go for a flex rate that allows unlimited payments I could get this paid off in the next 4-5 years. However my only concern was the fact that renting out house due to posting etc.
     
  5. Years ago, I transferred my mortgage to First Direct. Totally flexible so I could overpay when I could afford it. As a result I paid my mortgage off, no penalties, age 49. One of the best things (financially) I have ever done. The actual transfer was done for free by FD and it was seamless.
     
  6. Right; a bit different to my assumption, then!

    1. How much will it cost you to break the current mortgage contract? If you are locked in for 7 years (and it sounds like a pretty good deal even in today's terms) and they are enforcing the 5% max pa rule, it might be expensive! Bear in mind that if you do not have much equity in your house, most current lenders will not touch you.

    2. If you have a property that is let, mortgage interest is an allowable expense against tax. If you pay off the mortgage, then your profits will suffer a commensurate increase in tax. You need to work out a spreadsheet that shows the "before" and "after" of what you are trying to do and you should take account of an increase in tax.

    3. I didn't think that you meant a current account mortgage but that is what you are suggesting. These mortgages are very useful for those who are financially disciplined! However, their rates can be expensive. I have no idea how they will treat you if the house is already let.

    4. On the basis of the information that you have provided, I would be tempted to leave the mortgage well alone, make the regular overpayments and save the excess in an ISA where you can access it if you need it.

    Litotes
     
  7. If you would like to speak to an independent, whole of market advisor, PM me with your contact details and I'll get my colleague to contact you. He is used to helping service personnel (mainly Navy).