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eamon heggarty

Lifetime variable rate Vs 5 years fixed

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Hi All, 

In the middle of remortgaging my BTL and the broker came back to me staying he could get me 33K Additional borrowing with the Life time variable rate or 40K+ with a 5 Year fixed. (FYI 40K  additional would still leave me around 30% LTV). 

Why would banks be willing to lend more on the 5 year fixed vs the Variable rate and what are the drawbacks from this vs each other. 

Thanks

Eamon 


Home Equity Gains Group 

Property Investor & Developer

http://www.hegg.info ;)

https://www.instagram.com/hegg_ltd/?hl=en B)

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Hello 

Id imagine it will be due to the rules on stress testing payments. When I was doing mortgages anything under 5 years was assessed on affordability using a stress test higher rate (5.49% at my company) , but for a 5 year deal you could use the actual rate and therefore as this will most likely be cheaper, you'll be able to borrow more. 

Hope this makes sense :)

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Yep crystal clear. 

 

Obviously a downside on fixed is not being able to access funds from the property again for 5 years vs being able to access funds but initially not being able to remortage the maxium amount. 


Home Equity Gains Group 

Property Investor & Developer

http://www.hegg.info ;)

https://www.instagram.com/hegg_ltd/?hl=en B)

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