basic help need with BTL

costingbunny_2

I think where my figures are different is that I am looking at taking money on my mortgage on a repayment basis over 19 years - I have looked at other options and note returns are much higher with an interest only mortgage over 25 years although I am looking to own the property in as little time as possible - hopefully 15 yrs. I will review my position so thanks for all the info.

phlash

Similarly I work on a repayment basis.

Some people employ an Interest Only type model, it's arguable which route to go down, and is dependant on what you may use the extra cash saved by not paying down the capital of the mortgage.

Personally, I like the repayment option, as my risk is reducing with each repayment. I can always re-mortgage if I want to raise finance for other projects.

Mine is a 25 year term at present.

VIGILANT22

If you have a repayment mortgage then only the interest element of the monthly payments are allowable. If you are concerned about repaying the debt at the end of the term… from a tax viewpoint maybe it is worth considering an interest only mortgage on the rented property with an ISA.

Conrad

Dan_1976 wrote: »

Ignore? What are you on about?

He often does this sort of childish toy throwing. He's pretty rude hinmself - but that's ok by him.

phlash

VIGILANT22 wrote: »

If you have a repayment mortgage then only the interest element of the monthly payments are allowable. If you are concerned about repaying the debt at the end of the term… from a tax viewpoint maybe it is worth considering an interest only mortgage on the rented property with an ISA.

Agreed on the tax point.

But this scenario costs more in the long term I would have thought. On average, the ISA interest rate will be lower than the mortgage interest (with tax savings considered). Your best way of saving is to lower the mortgage interest, not necessarily build the capital up in an ISA (Where it is also tempting to touch!)

Gorgeous_George

A 40% tax payer saving in a cash ISA could be earning, for example, 3.5%. Their BTL interest only mortgage would need to be less than 5.83% to make the ISA the better option. For a basic rate taxpayer, the rate is lower at 4.375%. My BTL mortgage is a lifetime tracker at 1.39% and is therefore interest only.

Also, interest only makes the tax return calculations easier.

GG

The_Economist

Read posts i'm confused. So on the whole would it be better to pay cash for a BTL rather than getting a loan.

Gorgeous_George

The_Economist wrote: »

Read posts i'm confused. So on the whole would it be better to pay cash for a BTL rather than getting a loan.

Depends on the mortgage rate and the rate that your money could earn elsewhere.

GG