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Original poster

Mortgage on second property

10 replies

MarcoPoloCX · 01/07/2014 19:46

Hypothetically let's say I am mortgage free on property A and have a buy to let on property B. In the future if I decide to move in to property B, can I get the lender to switch to a normal mortgage?

OP posts:
Original poster
MarcoPoloCX · 02/07/2014 08:54

Or could you remortgage to a normal mortgage with another lender?
Anyone?

OP posts:
victrixludorem · 02/07/2014 08:58

Best advice: mortgage your main residence to raise the money to buy property B. You can still claim the interest against tax as long as the "purpose" of the loan is to buy property B. There is not need in law for the borrowing to be secured on any particular property. You can therefore borrow at sensible rates from the off.

Eminybob · 02/07/2014 09:10

Once you are living in property B you can remortgage it to a standard mortgage.

VivaLeBeaver · 02/07/2014 09:12

Yes, if you live there then you can switch to a non buy to let mortgage. You may have an arrangement fee for arranging a new mortgage.

Eminybob · 02/07/2014 09:30

What are you planning to so with property A btw? Sell it or let it out?

foxdongle · 03/07/2014 19:32

victrixludorem please could you explain how you put it on your tax return? the whole amount of interest ?

victrixludorem · 03/07/2014 22:08

Yes, just the same as if you had secured it on the rented out property. The only thing that matters is the purpose of the loan: HMRC don't give two hoots how the lender has secured it.

So, as far as the bank is concerned you are borrowing against property A (and this will be true) which is your main residence and so a loan is available at low rates (they are concerned only about their risk and the security), and as far as tax goes, the "purpose" of the loan is to finance the purchase of property B (also true) and so the full amount of interest is deductible as a legitimate expense.

The only downside is obvious: if you don't keep up repayments, the bank can repossess your main residence.

foxdongle · 03/07/2014 22:47

Thanks for that. We have a rental owned outright and re-mortgaged our old house to help buy it, a few years ago. we then paid a lot of it off but moved last year-so upped the mortgage again, though it's quite small still. would we still be able to do it? we will probably be mortgage free in about 3 years (plan to pay a big chunk off beg of next year, as out of fixed rate, could pay it all off with savings, but we like to have a lot of savings accessible for holidays/emergencies and such) or not worth the hassle?

apologies to op but hope you find this useful.

victrixludorem · 05/07/2014 10:31

If you can show that your purpose for remortgaging was to finance the purchase of the rental property then, yes, you can set off the interest on those additional borrowings against rental income. You may even be able to go back a few years - you would need to look that up. I can;t tell you if it's worth it - depends how much interest you paid and what rate of tax you are on. Can;t do any harm to look into it though.

Even better to be mortgage free!

foxdongle · 05/07/2014 22:09

Thanks very much. will look into that further Thanks

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