mortgage question, let maisonette

want2bmortgage3

here's the situation:

have a 102k mortgage on a 2 bed flat worth 140k. i get rent of £790 a month and the repayment mortgage is £650. which is ok as it covers the cost and i can save the £140 a month for future repairs, insurance and grund rent.

did have a residential mortage with buy to let approval (for a fee), it was a 5 year fixed but that has now ended. the rate was 4.89 its now gone down to 4.79 as the SVR was lower than the fixed rate!

however i'm a bit worried about the future if the mortgage company puts its rates up. also lookin at buy to let fixed rates they are closer to 6% which would be a big increase in my monthly payment.

should i do anything or just leave it and hope the svr rate doesnt go up?

Thrugelmir

want2bmortgage3 wrote: »

i get rent of £790 a month and the repayment mortgage is £650. which is ok as it covers the cost and i can save the £140 a month for future repairs, insurance and grund rent.

Are you making a taxable profit on letting the property? As you are appear to have made no allowance for paying tax.

want2bmortgage3

no dont think im making any profit what with a void period of 2 months not long ago, plus paying for the building insurance and ground rent as well as other repairs to plumbing etc... its an expensive business.

want2bmortgage3

ah i will just leave it then but hate the uncertainty

JQ.

You are aware you pay tax on all income above the interest element of your mortgage aren't you? You are making a taxable profit of £380 pcm, which totals £4,560 per annum. So unless your ground rent and plumbers bills amount to £4.5k a year, at some point in the future you are going to face a very large tax bill and a fine. At a guess 5 years at £4,560 amounts to a tax bill of £7k, or £11.5k for a higher rate tax payer.

HMRC are taking this very seriously in the current climate and they will catch up with you eventually. A mate of mine was almost bankrupted 10 years ago over a BTL - he'd spent all the profit!

Go and see an accountant, they will sort it all out for you and minimise your tax bill, but ignore it at your peril.

blueberrypie

want2bmortgage3 wrote: »

no dont think im making any profit what with a void period of 2 months not long ago, plus paying for the building insurance and ground rent as well as other repairs to plumbing etc... its an expensive business.

The repayment portion of your mortgage is also considered profit - after all, if you continue to let it out until your mortgage is paid off, you will have profited by the value of the property. There's a difference between taxable profit and "extra money in your pocket". As others have suggested, an appointment with an accountant would be a good idea (and will potentially save you thousands of pounds in unpaid taxes plus fines, so it's money well worth spending).

somethingcorporate

want2bmortgage3 wrote: »

no dont think im making any profit what with a void period of 2 months not long ago, plus paying for the building insurance and ground rent as well as other repairs to plumbing etc... its an expensive business.

Are you letting it out furnished or unfurnished?