Best to pay off my mortgage?

ReluctantLandlord_3

Hi. I became a reluctant landlord a few years ago and have the following BtL which I intend to keep:

Value £150k
Mortgage £100k
SVR 6%
Rent per annum 9k

I have come into some cash and could pay off the mortgage. It seems a bit complicated but would I be better paying off the mortgage and just having the rental income instead of interest?

I am a basic rate taxpayer and have no other plans for the cash. Employment safe and income sufficient to pay for my other mortgage.

If anyone feels willing to advise then I would appreciate.

CLAPTON

6% is quite a high rate
you would be lucky to get 3% interest on your savings

Road_Hog

CLAPTON wrote: »

6% is quite a high rate
you would be lucky to get 3% interest on your savings

Yes but you can claim the interest element of the mortgage against your rental income for tax purposes.

Pimperne1

How about this:

Keeping Mortgage

Income from rent £9000
Payment to Bank £6000 (100k x 6%)
Payment to Taxman £600 (at 20%)
Interest on £100k in bank £2.4k (at 3% - 20% tax)
Cash in hand £4.8k

Paying off mortgage

Income from Rent £9000
Tax £1800 (assuming you stay on lower rate)
Cash in hand £7.2k

Back of a fag packet and purposely missing out things that can be claimed in both instances.

Generali

If you're older than 40 I'd pay off the mortgage. Younger and I'd pay off £25,000 and get a second place on 50% LTV.

ReluctantLandlord_3

Many thanks. I have some spare cash over and above the mortgage amount so I think I will get rid of that mortgage. Couldn't really see why it wouldn't be a good idea but sometimes you miss the obvious. Certainly not interested in taking on another property to let!

Generali

ReluctantLandlord wrote: »

Many thanks. I have some spare cash over and above the mortgage amount so I think I will get rid of that mortgage. Couldn't really see why it wouldn't be a good idea but sometimes you miss the obvious. Certainly not interested in taking on another property to let!

I should've worked that out from your username!

DiggerUK

ReluctantLandlord wrote: »

.....
Value £150k
SVR 6%
Rent per annum 9k........

It seems that with a 6% return on your capital, a 6% mortgage, and a housing market heading for the toilet, you have answered your own question.
..._

the_flying_pig

ReluctantLandlord wrote: »

Hi. I became a reluctant landlord a few years ago and have the following BtL which I intend to keep:...

so you're no longer a reluctant landlord, then, you're remaining so out of choice.

anyway, pimp's post below seems sensible enough. don't act on gut feel, take the trouble to work out your ingoings and outgoings if you pay off vs. don't pay off and take it from there.