Buy to let possible?

holly_hobby

gratefulforhelp wrote: »

Thanks Holly. I had thought about the second home aspect, but we have a residential mortgage of 215 k and combined income of around 75, so I don't think the income multiple will allow it?

With a combined mge debt of 415k you are well out - not only on mulitples, but I would also guess from your income, that you simply wouldn't be able to service the 2 of them regardless.

Let to buy (whereby exis mge commitment is effectively ignored) is also out of the window, as you don't intend to live in property B, nor let property A.

I think its back to the drawing board - and BTL (if you can get the rent fig up to 120% of the mge using 6% as a ballpark calculation fig and interest only (to maximise the tax breaks)

H

gratefulforhelp_2

Thanks you've been really helpful. Will have a look around.

How does interest only maximise tax breaks?

getmore4less

gratefulforhelp wrote: »

Thanks you've been really helpful. Will have a look around.

How does interest only maximise tax breaks?

That is just a simplification of the situation and basicaly wrong
You pay pax on profit so returns are higher the lower the debt.
Interest only just keeps the debt up and the interest.

eg (20% tax payer)
1.£120k @ 5% I/O £500pm rent £500pm tax £0, net profit £0
2.£60k @ 5% I/O £250pm rent £500pm tax £50 net profit £200pm

Repayment move you from 1 towards 2.

(With 1 you could have £60k in the bank earning a bit of interets but no where near £200 unless you can find 5%.



You can offset interets on debt upto the value when first let so repayment/overpayment can be better if you have other borrowing you can use(like a residential) that is at a lower rate.

gratefulforhelp_2

Thanks. I know you will think this bonkers, but if we break even I will be happy. The motivation is to get the garden!