Mina
13-04-2006, 15:29 PM
It's time to remortgage and my options are:
1. Release about 10K of equity to 'play' with e.g. to perhaps invest elsewhere or reduce our home mortgage. However, increasing the mortgage by this amount will mean that my profit margin on rent is about 20quid a month.
2. Reduce the remortgaged amount by about 10K so giving me a more comfortable 'margin' on the profit (which of course I will be taxed on)
3. Leave the amount as is. The profit margin is about 70 a month.
As far as an income generator then, it ain't great.
I'm not sure what to do. Alot of these property investor advisors tell you to mortgage to 85% LTV whereever possible thus leaving as little of your own money actually invested in the property. The trouble i have with this approach is that depending on when the fixed rate period ends, I could potentially face the situation where the interest rates have shot up and the rent doesn't cover my mortgage (rent hasn't changed on the property in three years). I have such a narrow margin as you can see.
I bought the property with a view to cashing in on the capital appreciation - it's in an area undergoing massive investment. I MAY sell in three years but who knows.
Would you seek to pay off the mortgage on a BTL property or would you mortgage to the max 85% as some 'professional' investors would advise?
Any advice/opinions welcome. Thanks.
1. Release about 10K of equity to 'play' with e.g. to perhaps invest elsewhere or reduce our home mortgage. However, increasing the mortgage by this amount will mean that my profit margin on rent is about 20quid a month.
2. Reduce the remortgaged amount by about 10K so giving me a more comfortable 'margin' on the profit (which of course I will be taxed on)
3. Leave the amount as is. The profit margin is about 70 a month.
As far as an income generator then, it ain't great.
I'm not sure what to do. Alot of these property investor advisors tell you to mortgage to 85% LTV whereever possible thus leaving as little of your own money actually invested in the property. The trouble i have with this approach is that depending on when the fixed rate period ends, I could potentially face the situation where the interest rates have shot up and the rent doesn't cover my mortgage (rent hasn't changed on the property in three years). I have such a narrow margin as you can see.
I bought the property with a view to cashing in on the capital appreciation - it's in an area undergoing massive investment. I MAY sell in three years but who knows.
Would you seek to pay off the mortgage on a BTL property or would you mortgage to the max 85% as some 'professional' investors would advise?
Any advice/opinions welcome. Thanks.