The benefits of paying off a BTL mortgage? 13 July 2006 at 11:01AM in Mortgage-free wannabe 3 replies 993 views

rozeepozee

I'm about to sell one of my BTL properties and after I've paid back the mortgage company will have enough equity to pay off another mortgage on a BTL property that I intend to hold onto.

Is this a sensible thing to do or are there better ways I can use the money? Is there any benefit to not redeeming the entire mortgage (say just reducing it to a much smaller or nominal amount?)

Thanks in advance

Hillfly

Well i'm no expert on this but i would have thought that you can get tax breaks on your mortgage payments on the BTL which could offset the tax on the income from the rental.

However if you own the property outright all income is taxable.

dang

That depends on your rate on the btl,and if you have used up your isa allowance,and your partners if you have one.

Also worth remembering you can offset the interest cost on the btl against any profit you may make - which is always nice :-)

rozeepozee

Thanks for those posts. I think it's an attitude thing: I don't like debt and the thought of being mortgage free on a property is very attractive to me - but I guess it's different when it's an invejment property. From a heart-not-head point of view it's further complicated by the fact that the investment property in question is one of 3 properties in a converted vic house, another of which is my own home - so I kind of like the idea of owning this entire property outright. The other flat has a big mortgage on it though so that won't happen for a while. Maybe the thing to do is to invest the money in high interest accounts and let it grow - thus deferring the decision in a sensible way!