UK Landlord Forum / Life

Hi, have a couple of flats with separate interest-only variable-interest mortgages and not tied in. However, I haven't attempted to remortgage as there isn't enough equity for a lender to lend against and in a sale I would end up owing more when adding costs of sale. 


With the interest rate rises and tax changes (I'm in 40% bracket in my day job), any profit has been wiped out. Guess its best to sell as soon as possible, or ride it out in the hope that rates will go down. I have increased rents to fair market amount, any more then will be unfair and lose tenants.

Is there an option where lender can repossess from me, if so what would be impact of this route? Happy to do the reading, if I can be pointed to the right place. Thanks in advance

I can't understand how there's no profit in a property at market rate rent when you're only paying out an interest-only mortgage payment.

Can you be more giving with actual figures, please? I always thought Landlords taking the interest-only mortgage route were living the high life, while I was effectively scrimping and scraping, saving for my future with these repayment mortgages (and I'm still in profit, so how is it that you aren't?).

Yes, definitely interest rates will go down - but there is a feeling that we have been 'spoiled' for a long time of very low interest rates and the good times might not be back. I dunno. If you read the BBC site they say there's more pain coming, so if you're not in profit now then that is likely to only get worse on a variable rate and if you have a day-job then maybe your heart is not into being any kind of Landlord and you have back-up and can just go back to PAYE and a simpler life... so possibly time to exit, stage right.

Quote from: Chris300 on June 13, 2023, 06:48:51 PM
Is there an option where lender can repossess from me, if so what would be impact of this route? Happy to do the reading, if I can be pointed to the right place. Thanks in advance

Unlike some countries, you can't just metaphorically hand the keys back. If the bank did repossess the property, you would still be liable for any shortfall after they've sold the place for whatever they can get in a hurry, and deducted their not inconsiderable costs from the proceeds. It's really not an option.

To be honest, none of the options look hugely attractive. If you sell with a tenant in situ you'll most likely get less than you would with vacant possession but if you wait for the tenant to leave or you go down the eviction route, you could have several months of no income before you finally complete. I take it you haven't got any substantial funds languishing in a savings account that you could use to pay off some of the mortgage? That might give you sufficient equity for more lenders to look at you and maybe get you off the mug rate. Even then it doesn't look pretty: residential two year fixes are averaging 6% and BTLs are going to be north of that.

I'm surprised there's no material equity in either property, given the way property prices have risen in recent years. How long have you held these properties?