Mortgage options buy to let or residential

[AmyJahabee]

Hi All,

I'm currently in the process to buy a house that I will be moving to live as my main home. The current house I’m living in now I owe outright.

I don’t want to sell the house as me and my mum( she helped to buy the house) agreed that house would be for my children inheritance once sold in the future.

Options one
l would like to take a mortgage ( small about £60k) on my current property to use towards the new house I intend to buy. Once I move in the new house I will be renting my other house and use the rental to pay for the mortgage for the rental house. Is this a good option?

option 2

take a mortgage as normal and rent the other house. But as it owe outright and I’m on 40% tax bracket I would pay higher tax on all rental income as no mortgage expenses to pay.

is there any thing to consider?

Not sure how much of mortgage interest you can deduct from rental income (option 2). Either option if you pay 40% tax I believe you may have to pay that on a portion of your rental income (unless you are lookimg at making a limited company). I would seek accountancy advice.