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    • UKSBD
    • By UKSBD 22nd Sep 17, 3:05 PM
    • 474Posts
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    UKSBD
    taking out residential mortgage to pay of BTL Mortgage
    • #1
    • 22nd Sep 17, 3:05 PM
    taking out residential mortgage to pay of BTL Mortgage 22nd Sep 17 at 3:05 PM
    I currently have;


    Property A - £280,000 value with a £60k BTL mortgage on it


    Property B - Main residence, £350,000 value with no mortgage.


    I want to take out £60k mortgage on property B to pay off property A


    When filling in any forms it always asks about existing mortgages, but the whole idea is to get the new mortgage to pay of the existing one.


    Will some in a branch factor in that their won't be 2 mortgages if I take out the2nd one and what type of mortgage is this classed as?
Page 1
    • Thrugelmir
    • By Thrugelmir 22nd Sep 17, 3:21 PM
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    Thrugelmir
    • #2
    • 22nd Sep 17, 3:21 PM
    • #2
    • 22nd Sep 17, 3:21 PM
    What is the aim of moving mortgages between properties?
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • amnblog
    • By amnblog 22nd Sep 17, 4:37 PM
    • 10,071 Posts
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    amnblog
    • #3
    • 22nd Sep 17, 4:37 PM
    • #3
    • 22nd Sep 17, 4:37 PM
    It can be done but you may find lenders to be a pain about it.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • UKSBD
    • By UKSBD 22nd Sep 17, 4:44 PM
    • 474 Posts
    • 148 Thanks
    UKSBD
    • #4
    • 22nd Sep 17, 4:44 PM
    • #4
    • 22nd Sep 17, 4:44 PM
    What is the aim of moving mortgages between properties?
    Originally posted by Thrugelmir

    Current BTL is Interest only, 2 year deal ends soon, it seems to make more sense to switch to residential mortgage as rates appear to be far better than BTL rates (even accounting for the tax)
    • Thrugelmir
    • By Thrugelmir 22nd Sep 17, 4:53 PM
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    Thrugelmir
    • #5
    • 22nd Sep 17, 4:53 PM
    • #5
    • 22nd Sep 17, 4:53 PM
    Current BTL is Interest only, 2 year deal ends soon, it seems to make more sense to switch to residential mortgage as rates appear to be far better than BTL rates (even accounting for the tax)
    Originally posted by UKSBD
    Then also a question of the lenders internal criteria as to the purpose of the remortgage. Not all lenders will be interested in such business.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • enthusiasticsaver
    • By enthusiasticsaver 22nd Sep 17, 4:54 PM
    • 4,841 Posts
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    enthusiasticsaver
    • #6
    • 22nd Sep 17, 4:54 PM
    • #6
    • 22nd Sep 17, 4:54 PM
    Usually yes residential mortgages are a lower interest rate than BTL. We raised one on our main house when our mortgage was paid off to buy a flat for our daughter to live in when she was doing post grad study. We had no difficulties doing it but we had no existing mortgage.

    Your difficulty may come in that you already have a mortgage on one. Some lenders may agree to that if they do the actual redemption of the existing mortgage so you will need to explain that. Otherwise they may only lend on the basis that you keep both which means your income would have to be substantial. Having said that as the mortgage is only £60k and most lenders will do at least 4 times income you would only need an income of £30k for it to not be an issue (not including the rent on the BTL which they may not accept). Whichever way it is done you need to declare the existing mortgage and explain the purpose of the new mortgage is to pay off existing borrowing.
    1 week to go until early retirement. 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
    • UKSBD
    • By UKSBD 22nd Sep 17, 7:21 PM
    • 474 Posts
    • 148 Thanks
    UKSBD
    • #7
    • 22nd Sep 17, 7:21 PM
    • #7
    • 22nd Sep 17, 7:21 PM
    it's crazy, all I really want to do is move the mortgage from one property to the other but the system doesn't appear to allow it


    The money will be used to pay of the mortgage so implying on the forms that I will have 2 mortgages doesn't make sense.
    • dimbo61
    • By dimbo61 23rd Sep 17, 6:38 PM
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    dimbo61
    • #8
    • 23rd Sep 17, 6:38 PM
    • #8
    • 23rd Sep 17, 6:38 PM
    You need to show a Clear line between paying off the Interest Only BTL mortgage and taking out the Repayment Residential mortgage in order to prove to the TAX man that you have done this to reduce your costs ( mortgage)
    You can only offset the Interest only part of the mortgage payment against your profit from renting
    • UKSBD
    • By UKSBD 24th Sep 17, 10:07 AM
    • 474 Posts
    • 148 Thanks
    UKSBD
    • #9
    • 24th Sep 17, 10:07 AM
    • #9
    • 24th Sep 17, 10:07 AM
    You need to show a Clear line between paying off the Interest Only BTL mortgage and taking out the Repayment Residential mortgage in order to prove to the TAX man that you have done this to reduce your costs ( mortgage)
    You can only offset the Interest only part of the mortgage payment against your profit from renting
    Originally posted by dimbo61

    The property I am renting out will be mortgage free.


    The new mortgage will be on our main residence, I wasn't intending to claim the interest on the residential mortgage against the rent I'm earning.


    The difference in rates still make it work out cheaper.
    • Time2go
    • By Time2go 24th Sep 17, 12:29 PM
    • 198 Posts
    • 43 Thanks
    Time2go
    Dimbos advice re tax is incorrect. You would be able to offset interest paid on loan up to either value of property at purchase or date first let whichever is lower. People refinance all the time and never seen hmrc disallow it
    • UKSBD
    • By UKSBD 6th Oct 17, 3:24 PM
    • 474 Posts
    • 148 Thanks
    UKSBD
    Dimbos advice re tax is incorrect. You would be able to offset interest paid on loan up to either value of property at purchase or date first let whichever is lower. People refinance all the time and never seen hmrc disallow it
    Originally posted by Time2go


    Does that mean that if you had a main residence with no mortgage on it you could remortgage it, use the money raised to buy a BTL and still claim the tax on the interest element back?
    • silvercar
    • By silvercar 6th Oct 17, 3:56 PM
    • 36,203 Posts
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    silvercar
    Does that mean that if you had a main residence with no mortgage on it you could remortgage it, use the money raised to buy a BTL and still claim the tax on the interest element back?
    Originally posted by UKSBD
    Yes.

    It is the purpose of the loan that counts, not where (or if) it is secured.
    • UKSBD
    • By UKSBD 6th Oct 17, 4:46 PM
    • 474 Posts
    • 148 Thanks
    UKSBD
    Yes.

    It is the purpose of the loan that counts, not where (or if) it is secured.
    Originally posted by silvercar

    Thanks,


    so moving my Mortgage is a Win - Win then.


    If I get a £60k mortgage on my main residence, use that to pay off the mortgage on the house I am letting out, I can get about a 1.5% better interest rate but still get back the tax on the interest element of it
    • PKaurK
    • By PKaurK 7th Oct 17, 6:46 AM
    • 52 Posts
    • 36 Thanks
    PKaurK
    It shouldn't be an issue. You need to declare the existing mortgage and state it will be redeemed upon completion with the additional borrowing. There is usually an additional information box on the application, use it to fully explain the circumstances.
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