Posted on 28 August 2012 by Julie
My husband and I own a property outright, which we partly financed with a loan from my sister. We now wish to repay my sister by taking out a mortgage on the property. The property value is £220k and loan £92k. What approach would you recommend we take in securing a loan of £92k in the most cost effective way. We already have a buy to let mortgage on another property and a joint income of approx £66k pa and are aged 50 and 57.
The cheapest way to borrow will be by getting a mortgage on your current home. The lowest rates at the moment tend to be variable and linked to either the Bank of England Base Rate (BBR) or lender's standard variable rates (SVR). The risk with both of these is that no one really knows what is going to happen in the future and rates may go up. The alternative Fixed rate mortgages are currently priced at their lowest for a long time and are a very attractive option for people wanting certainty over the rate of interest they pay.
Secured personal loans are more expensive than residential mortgages and you would not be able to offset the additional interest paid against rental income for tax purposes if you raised the money on your investment property.
I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers. Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right mortgage for your situation.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.