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Pay off mortgage or convert to BTL

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  • Pay off mortgage or convert to BTL

    I recently bought a flat on a 'Right to Buy' mortgage with all intentions of moving in with my partner. Unfortunately, things haven't gone as planned and we now need to move into a larger property. Would it be best to change to a 'Buy to Let' mortgage (if my lender allows this) or pay off the existing mortgage and start a new mortgage on a larger house

  • #2
    Re: Pay off mortgage or convert to BTL

    Personally I would not sell a house I had bought discounted in the worst market conditions for a generation.

    Does the potential rental income cover all your costs - If so why would you want to sell ?
    Adam Long

    www.quickhomeseller.co.uk

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    • #3
      Re: Pay off mortgage or convert to BTL

      Hi cozzie,

      Before answering can I just clarify some things with you.....

      You are asking whether to change to a Buy to Let or pay the mortgage off so it isn't clear exactly what your plans are.

      Firstly, have you got sufficient deposit to put down on the purchase of a new bigger property wthout selling your current flat or do you need to draw equity from it?

      If you need to draw equity you need to think about how much you need to draw of the equity that is currently in the flat as this may prevent you from being able to secure a Buy to Let mortgage. Also, you seem to be assuming that you would have to approach your current lender to change to Buy to Let but this isn't necessarily the case, your current lender may provide you with Consent to Let, or you could potentially arrange a Buy to Let mortgage with a new lender and transfer (port) your current residential mortgage to your new property.

      Secondly, as you have bought your property under the Right to Buy Scheme have you checked if there are any restrictions on you either selling the property or renting the property out?

      Thirdly, as you own a flat have checked the terms of the lease to see if there are any restrictions on renting the property?

      At the moment there's too many unknown variables in your question to be able to post any guidance other than to say - find a good local mortgage broker and talk it through with them.
      ____________________________________________
      Property for sale in Torquay

      www.thomasdobner.co.uk

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      • #4
        Re: Pay off mortgage or convert to BTL

        The best piece of advice I ever received was from an accountant 10 years ago ref. mortgages. PAY OFF AS SOON AS POSSIBLE. I focused all my energy on paying it off in 7 years. It is achievable for most people; you just have to make other sacrifices but it's worth it.

        Roger.

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        • #5
          Re: Pay off mortgage or convert to BTL

          I would say that is a piece of advice that leads you to have a mortgage free house but you have invested no money in your future by using money you borrow to invest in more profitable means.

          Whereas I would definitely agree that borrowing money for toys such as cars and electronic goods is a waste of money, if you invest it wisely it can work for you many times over in the long run.

          I guess it just comes down to how risk adverse you are
          Adam Long

          www.quickhomeseller.co.uk

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