slight different mortgage o/p question

cheesesarnie

Hi...

have been overpaying reasonably well against mortgage which has just dropped on nationwide SRV (looking to move to tracker shortly)...

I've been thinking that one day in the next couple of years we might rent out this property & I think if the mortgage was bigger (ie. without the overpayments) we would be able to offset more interest against the rental income.....all the while the continued overpayments could be sat in a cash isa at a rate close/above the mortgage rate [we dont use ISA allowance currently]

does this scan?....

I also wonder, is ISA interest calculated daily like my mortgage?....this could work against the plan if not..

thanks for your help.

dimbo61

rental income has to be 125% of mortgage payment to keep mortgage company happy.
Some will not allow you to rent out house on normal mortgage and will make you take out BTL mortgage at higher rate
Check and see if overpayment money might get a better rate of return in cash ISA,s
Tax man allows interest payments on an Interest only mortgage against rental income but lenders now want 25% plus equity in a property before they will give BTL mortgage.

Welshlassie

Where would you live if you rent it out. If you plan on buying somewhere else you could just take out as much of the equity as you need to get the 125% ratio to use as a deposit on your next purchase and then overpay on that new mortgage.

cheesesarnie

thanks guys