First time BTL landlord may be making a big mistake!

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  • First time BTL landlord may be making a big mistake!

    (previously posted in the wrong area)

    I am a first time landlord and am about to complete on a flat to let out.

    I am financing this from inheritance so is a cash buy. £84k.

    But I have a mortgage on my home for approx £80k owing at 2.5%. I am extending the loan by £30k to do some home improvements again at 2.5%. Which will leave me with a balance owing of £105k. (repayment tracker)

    I have gone this way thinking been a cash buyer will get me the best deal on the flat. (Which it has). Also a 2.5% mortgage is better than at 4.5% BTL mortgage.

    Where I think I have gone wrong is that when I come to do my tax return (which will be new to me as I am an employee on the 40% income tax bracket). I will not be able to claim any interest payments against my costs.

    I am putting the flat in my wife name (20% tax), which may be the only thing I am doing correctly.

    The question is; can I claim a percentage of my mortgage interest from my home against the flats costs? Or would I have to get a BTL mortgage on the flat and pay off a large chuck of my home mortgage? I do not want to do this, as the banks are the main winner?

    Thanks in advance for any help, once you have stopped laughing at my naivety, any help appreciated.

  • #2
    Unfortunately, you can not claim the interest on your residence.

    I understand that you may feel aggrieved at the banks charging you more % for a BL mortgage, but it is a much bigger risk for them. The tax you save should offset the increased interest.

    Comment


    • #3
      Thanks Snorkerz.

      As my morgage extension has not cost me any charges, I can aply for a BTL and if it take some time I will have the cash to push the purchase through and then go for the best BTL deal I can find. Though this will incure me costs, which I know from my day job is to minimise always.

      The choice then will be how much I gear myself.

      Thanks virginlandlord

      Comment


      • #4
        1. The best offers on BTL mortgages in the market can be found listed on www.moneysupermarket.co.uk

        2 . Most lenders are looking at BTL borrowers taking 70% loans as max.

        Comment

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