Mortgage, stay on the roundabout?

LooniesMum

I have a flat which I rent, not a buy to let as I used to live there. The original reason for renting out this property (when I moved in with OH) was that it had negative equity. Over the last 6 years the negative equity has gone and indeed it is now worth more than the mortgage I have on it.

I now have some capital (inheritance, sadly....) - so my question is this: would you pay off a chunk of mortgage which would reduce the running costs of the flat? So far the flat has never made an overall profit (due to refurbishments and repairs), and if it did I would then be paying tax on the income from it. Whilst it doesn't make a profit, there is usually enough tenancy to service the mortgage.

The mortgage itself was an endowment mortgage, half of which I converted to a straight repayment mortgage to counteract the shortfall. If I paid off this part of the mortgage the outgoings for the flat would be less, especially as this part of the mortgage is not an allowable expense for tax purposes.

So - would you pay off what you could, like you might if it was your own home, or would you say the rent is servicing the mortgage and see it through to the end in about 9 years' time?!:think:

getmore4less

Only the interest get tax relief and on the repayment part you can still get the relief.

There is probably some of the maintanence that can be offset as well

Whats the mortgage amount(Interest only repayment split)
term(ok 9 years)
interest rate
rent

How much cash have you got
is there a mortgage on the place you live do you own any of that
how big is your emergency fund

LooniesMum

Emergency fund is OK, with inheritance probably now five months of the breadwinner's salary, and said breadwinner is a medic with good job security and income protection etc. Surplus that could go to the flat mortgage is £10K. I was under the impression the interest only part of the mortgage is allowable as an expense, but not the repayment part. I do claim for all the maintenance & landlord costs.

The interest only part of the mortgage is £17,500.00, interest rate 4.49%
The repayment part of the mortgage is 4.49% also, with a balance of £7100.00 left to pay. The endowment, needless to say, is pants, with the projected final amount being £18,300.00 (shortfall of £9200) in their 'worst case scenario' example of only 4% interest rate (this is why the £10K was split off as a repayment mortgage).

Thanks

LooniesMum

PS: No mortgage on the house we live in due to inheritance on the other side of the family. Must sound lovely - but actually I'd rather have my parents back!