We live abroad (Europe but not an EU country) and rent out our UK (home counties) house under a BTL on our fixed rate mortgage. The fixed deal ends in May next year at which point we will roll onto the standard rate and our monthly mortgage payments will go up. We have savings split between the UK and our current country.
We are in a position where we could use our savings to overpay our mortgage by 10% of the balance this year and again next year (10% is the max per year without penalties). This would keep our monthly payments at about the same level as they are now, and our equity would then be 75% based on current value. Plus we'd still have some savings to fall back on.
However, Brexit is making me nervous as to what it will do to a) interest rates and b) property prices and c) FX rates.
If we put the bulk of our savings into our UK mortgage and prices take a big drop, have we effectively mis-invested our savings? Or is it a good idea to bump up our equity as much as possible.
If we don't overpay, our monthly payments will increase. The rental income will still more than cover this, but if interest rates go up and up the excess will get smaller and smaller. Plus we're getting nothing currently in savings accounts (interest rates here are 0.01%!). Then where should I put our savings? UK or here?
I know no one has a crystal ball, but any advice or thoughts would be much appreciated.
We will seek formal advice in the coming weeks but thought I would try here for ye old wise MNers first.