Offset and Buy to Let Dilemma...

busy_b

I have a Buy to let mortgage on a property that a family member lives in rent free. He will hopefully live there for many more years and I have bought the property as a long term investment.
(Property value 150k, mortgage 25k

I also have savings that could be used to pay off the small mortgage of approx 25k. However, being self employed I'm reluctant to do this as I would like access to my savings.

I already offset the whole of my own private mortgage and wondered if it would make more sense to remortgage my own property, pay off the buy to let and then offset my 25k against this amount.

This way I would save the £320 per month mortgage repayments and still have access to my savings. There's no real tax advantage to keeping the Buy to Let mortgage as I receive no rent anyway.

Sorry to waffle on but does this make sense?

getmore4less

What are the rates.

How easy would it be to increase the main mortgage and what would the costs be.

How big is the main mortgage.
Are there any overpayments on that you can claw back anyway
How much emergency funds do you really need.

how quickly will you rebuild that level of savings.

What are the plans if the family member no longer needs/wants the place, might change the tax view.

busy_b

What are the rates:-
The rate on my own offset is 0.89% above base. My own mortgage is 36k and the property is worth 250k
I'm unsure of the current Buy to Let rate but I pay approx £350 per month and have approx 25k left to pay on it. (Approx current value 125k minimum)

How easy would it be to increase the main mortgage and what would the costs be.
It would cost approx £150.00 to add the 25k to my main mortgage and it should be straight forward due to the equity in both properties.

How big is the main mortgage. (see above)

Are there any overpayments on that you can claw back anyway (sorry, not sure what you mean)

How much emergency funds do you really need. (We have Isa's for emergencies )

how quickly will you rebuild that level of savings. (This amount came from the sale of another BTL but we would place the £350 p/m previous mortgage payment in some form of saving/investment).

What are the plans if the family member no longer needs/wants the place, might change the tax view. (I hope its a very long term thing but would sell or rent the property out).

So based on the above, does it make sense? Thanks for any thoughts on the above.

getmore4less

For £150 I would just do it, rate probably won't be as good but it will be offset anyway so won't cost anything.

On the other side,

£36k is probably enough liquid funds(with ISA backup) unless you are plan to make some other big purchases. depends how critical the income from employment is.

£150 to make this upto £61k or even more while you are changing gives more choices down the line, could be some bargain BTL coming up with good rental yields(well over 10%) or fund some business expansion you never know.

Are there any overpayments on that you can claw back anyway (sorry, not sure what you mean)

On the existing loan if you have overpayed it may be possible to reset the loan back to a higher level/term for a lower fee/rate than an extension, maybe a combination.

One other thing if you are filling the ISAs and still have more surpluss then I would fund emergencies from the offset and keep the ISA intact, the liftime tax savings will potentialy be worth a lot more than a bit of interest for a short time

busy_b

Thanks for that.

I ponder for months and must have lost thousands in interest just leaving my money in bog standard accounts.

At least by offsetting jointly we should be covered upto 100k too.

Cheers again.

getmore4less

Offset money just pays off the debt so should not need to worry about the £50k limit just loss of liquidity.