Hilary took an interest-only buy-to-let mortgage six years ago for £105,000 with the Northwood Building Society, with a term of 25 years. The mortgage payments were fixed for five years at a rate of 3.75% four years ago.

The buy to let property is currently worth £155,000 and has been rented to the same tenant for £450pm since it was purchased. Hilary has always lived in rented accommodation herself as she moves around a lot with her job.

Four years ago, she took out an unsecured loan for £9,000 over a 10 year term from Plumtree Finance in order to carry out some essential repair work to the house and to fit a new bathroom suite. Repayments on the loan are £125 per month.

Hilary now wishes to take a further advance from Northwood Building Society for £30,000 to refinance this loan and pay for an extension to the property She estimates that the work when complete will increase the property’s value to £195,000. She has available savings of £4,000 towards costs and expenses.

Hilary is employed as an area sales manager for a lace manufacturer earning £35,000 per annum plus bonuses of about another £5,000pa. Net income from her basic salary only is £2,170pm, and she receives between £450 and £1,500 net from bonuses each quarter.

She is also considering taking landlord insurance, which she has never bothered with before.