Hi John

I have 3 buy to let properties with Mortgage Express on fixed rates until April 2010 on a rate of 5.19%. As you know they are offering me a get out of the mortgages card as they are trying to recoup funds. "Nice business as each mortgage cost me over 4,000 pounds to set up less than a year ago".

I owe 191,000 pound on 2 of the properties, which are now worth about 175,000 and about 170,000 pound on the other property which is probably worth 170,000.

As I am rather new to buy to let. I am slightly concerned about what will happen next April at the end of my fixed rates. Am I right in thinking that I will be offered 85% LTV on remortgages?

If this is the case, I am still looking at laying out some hefty cash to come into that 85% category.

I have looked at my mortgage details and see that, at the end of the mortgage fixed rates, I continue on the lenders Standard Variable Rate, which I believe was 2% above Bank of England Base Rate. Will this still be the case and in the current climate would this mean that the new rate would be 2.5% (2% above the BOE Base Rate?

When I first received the letter from them, I thought this was a good thing as rates were going down but there just doesn't seem to be any better deals out there than what I am already on.

Any info you can give me would be much appreciated.

Thanks Justin

Hi Justin,

Unfortunately unless you can reduce the balance (and therefore the loan to value) you will not be able to switch your mortgages to another buy to lender. This is a common dilemna with the double whammy of reducing loan to values by buy to lenders and house price falls. The only way you could do this is if you have capital to reduce your current loans so that they would fit a 75% remortgage.

If this isnt possible you will have to stick with MX - this wont necessarily be a bad move as long as rates stay low your reversionary rate (the rate you revert to after your fixed rates ends) will be low however the danger will be if rates rise over the next two years.

It is however unlikely you wont be offered any other mortgages by MX.

If you can build up a cash pile to help should rates rise over the next few years. You may even want to consider a ratecap product to cap the interest rate you will pay should rates rise quickly however you can only apply for this 3 months before your fixed rate ends.

Hope this helps
John

Hi John

Thanks for advise. It sort of clarifies what I thought.

Will have to see how things go.

Justin