SMF - Just Installed!

Mortgage

Started by daz, November 09, 2016, 02:54:15 PM

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daz

Hi there

I have now been a landlord for nearly 3 years, this site has been very informative over that time.
My fixed rate interest only btl mortgage is coming to an end soon, so I am wondering now due to the new tax laws that will be coming in, would it be advisable for me to re-mortgage my residential property, taking the extra money out of my house to pay off my btl? The rent that I am receiving would cover my total new mortgage costs.

Any advice would be greatly received.
Thanks
Daz

Hippogriff

Mathematically-speaking, it might look good.

But I would never re-mortgage my own home to play in BTL. Playing in BTL is what you do after you've made your own home safe and secure.

The fact that your BTL mortgage has a fixed rate isn't a variable in this equation - what you mean, I assume, is that your tie-in period is coming to an end, or have I missed the point? Many people on fixed rates from a few years ago could actually get a better mortgage today, I'm sure.

The new tax laws are intended to stop people getting into BTL... not to get them borrowing in different inventive ways... why not, instead, accelerate paying down of the debt? That will reduce your tax bill, and significantly?

daz

Hi Hippogriff

Thanks for the prompt reply, I think that starting to pay down the debt would be a good idea.

Regards

Hippogriff

So, ensure your next mortgage doesn't have silly limits on the amount of overpayment you can make without penalty, i.e. 10%.

Although, depending on the size of the debt, that might be OK... but I like the freedom to overpay.

Or - even better - to offset - then you get the saving and the flexibility.

Simon Pambin

There's an understandable psychological barrier to increasing the borrowing on your own home: it just feels riskier somehow. Having said that, if the amounts you're borrowing are in your comfort zone, it does mean that you'd have access to lower interest rates and a greater range of products - you don't get many lenders offering offset mortgages to the buy-to-let market.

I'm in a similar position at the moment, coming to the end of a fixed rate, and wondering whether to just pay off a lump and then re-fix for a couple more years with a fairly aggressive repayment schedule, or flip the mortgage to our home and go for an offset mortgage so that we can effectively pay it down even harder but still have access to a substantial "emergency fund" at short notice. Given the numbers and logistics involved in our case it's probably not worth it but I might run it past a mortgage adviser anyway.

Hippogriff

One of the properties I let out used to have a residential mortgage with YBS. YBS don't do BTL at all, but they do CTL instead of forcing me to do something more drastic. So I've been CTL on it now for around 3 years and I retain the offset facility... which I am a big fan of. I put all of my deposits in there, from the Insured DPS scheme - they're all in one safe and isolated place, but they work quite hard for me (deposits usually being around £1,000).

I also have an offset for my home. I put most of my other spare cash in there as it's even more efficient.

Paying down debt is highly rewarding. I recommend it to everyone.