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Thread: Buy to let mortgage or remortgage?

  1. #1

    Buy to let mortgage or remortgage?

    We are thinking of venturing into the world of buy to let. We have recently paid off our mortgage on the house we live in (worth around 250k) and wondering whether if we are looking at buying a property for 100k (we would pay around 30k deposit) - whether its best to get buy to let mortgage or remortgage for the amount. Any thoughts appreciated

  2. #2
    If you take an interest-only BTL mortgage, your mortgage interest payments will be an expense for tax purposes. If you remortgage your home, you cannot claim that.

  3. #3
    thanks sounds like BTL is the best option - any thoughts whether a repayment or interest only would be best. We are looking for income for retirement mainly(10 -15 years away) - we do not need the income from the rent in the mean time as we have paid off our mortgage? Probably looking at a mortgage for BTL of 80 k?

  4. #4
    It is a balancing act, but my personal preference is to maximise the yield on BTL property today, so I go for interest-only, and offset the lot against tax. If you pay down the mortgage, you will be left with a property which will be liable to tax on the full value when you sell it. Take the money now and put it in a ISA!

  5. #5
    As I understand it it does not matter if you have a BTL mortgage or a remortgage of your main residence. If you remortgage, the interest on the part of that remortgage that is specifically for the BTL is deductable for tax purposes. I have done this myself. I recall reading in a long HMRC document (IR150) saying that this was the case, however DYOR. IF you think about it as long as you can prove you got 80K out and bought a BTL with it what does it matter from a tax perspective. However track down that document and make sure.

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