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  • FIRST POST
    • catw1
    • By catw1 12th Jul 17, 2:58 PM
    • 2Posts
    • 0Thanks
    catw1
    Got 60k need help!!
    • #1
    • 12th Jul 17, 2:58 PM
    Got 60k need help!! 12th Jul 17 at 2:58 PM
    Hi Guys,

    I have 60k sitting in my bank at the moment and I am unsure of what to do with it; I have two mortgages, one my primary residence which I have just re-mortgaged and have a good re-payment deal on. The other is an IO on a flat that I rent out.

    I am most likely (dependant on the market) going to sell the flat June/July 18 as I have had issues with tenants and it's hard work!

    So, with inheritance I have access to £60,000 and I don't know what to do - should I pay it off the Flat and raise the rest on my current mortgage and clear the flat mortgage totally? I can raise funds on my primary as I have approx £200,000 equity. If so will I lose out when/if I sell (tax!?)

    Should I wait until the end of the mortgage year and pay it off my primary. Invest it maybe - I am looking for some thoughts please!!

    Thanks in advance catw1
Page 1
    • Sncjw
    • By Sncjw 12th Jul 17, 8:10 PM
    • 1,474 Posts
    • 876 Thanks
    Sncjw
    • #2
    • 12th Jul 17, 8:10 PM
    • #2
    • 12th Jul 17, 8:10 PM
    Could pay off the flat the. Anything left over go to the other place. Also the rent will help pay to the other place as you won't be paying the flag with the rent
    • middleclassbutpoor
    • By middleclassbutpoor 12th Jul 17, 9:27 PM
    • 70 Posts
    • 109 Thanks
    middleclassbutpoor
    • #3
    • 12th Jul 17, 9:27 PM
    • #3
    • 12th Jul 17, 9:27 PM
    Probably could do with a few more details such as how much equity is in the rental property and whether there rent covers the mortgage etc. Also would need to understand more about any gains in capital and your income etc to provide a clearer picture.

    You should pay the highest interest bearing debt first when it comes to repaying debt to save the most interest, which is likely to be the BTL mortgage. However there are tax considerations. For example if you have had the property sufficiently long enough to attract any capital gains which would take you above your allowances, you will be facing a tax bill.

    If this is the case then the rental income may count towards your income and should this income then take your earned income from Basic to Higher rate tax position, then you could face a 28% tax bill on the gain above your allowances rather than 18%.

    I would consult a tax professional or post more details on your financials to allow a better answer. You may get a better response on the mortgage boards.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Jul 17, 11:23 PM
    • 4,680 Posts
    • 8,868 Thanks
    enthusiasticsaver
    • #4
    • 12th Jul 17, 11:23 PM
    • #4
    • 12th Jul 17, 11:23 PM
    what interest rate are you paying on each mortgage and how much equity on each? I would agree with middle that probably the BTL is the most expensive so you would be best using the money to pay that down. Do you have any emergency savings?

    The capital gains will only apply if you sell the flat so that is not affected by paying off the mortgage.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • middleclassbutpoor
    • By middleclassbutpoor 13th Jul 17, 8:35 PM
    • 70 Posts
    • 109 Thanks
    middleclassbutpoor
    • #5
    • 13th Jul 17, 8:35 PM
    • #5
    • 13th Jul 17, 8:35 PM

    The capital gains will only apply if you sell the flat so that is not affected by paying off the mortgage.
    Originally posted by enthusiasticsaver
    But if you pay off the BTL and increase the profit from rent, this will be treated as income as I understand, hence why it could increase the tax bill potentially when they sell if it moves them into the higher rate of tax.

    They may be already a higher rate of tax though - not enough detail to make the decision correctly imo
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