Fixed Rate BTL Mortgage Ending - Now What?

afshanq

Hi,

This is probably a no brainer but I just wanted to make sure I'm not missing out on anything crucial.

I am coming to the end of BTL Mortgage with Woolwich. Details are:
Interest Only at 6.19%, 15 years term, Loan amount 130k. Been paying about £770 a month.

In May I will have 10 years left as this was a 5 year fixed rate. Looking at my mortgage agreement it says that after the fixed rate the term continues on Barclays Base Rate + 0.95%.

I doubt there is much equity left in the property (nor do I have any savings) to be able to remortgage.

Am I correct in assuming that if I continue on interest only, I will have a rate of 1.45%??

Thanks for your advice in advance

kingstreet

You appear to be correct about the rate.

Don't forget your mortgage interest reduction to £157 per month means more of your rental income will be taxable. If you have any repairs to carry out to the property, these can be offset.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027

Allowable expenses
The expenses you can deduct from letting income (unless it's under the Rent a Room scheme) include:
letting agent's fees
legal fees for lets of a year or less, or for renewing a lease for less than 50 years
accountant's fees
buildings and contents insurance
interest on property loans
maintenance and repairs to the property (but not improvements)
utility bills (like gas, water, electricity)
rent, ground rent, service charges
Council Tax
services you pay for, like cleaning or gardening
other direct costs of letting the property, like phone calls, stationery, advertising
If your annual income from the letting for the tax year 2010-11 is less than £70,000 (before you've taken off expenses) you include the total expenses on your tax return; if it's £70,000 or over you need to provide a breakdown.
Bear in mind that you can only claim expenses that are solely for running your property letting business. If the expense is only partly for running your business (or if you use the property yourself) then you may only be able to claim part of it.