Advice on Buy to Let mortgage tax relief

holly_hobby

Yes of course - thats accurate as its classed as capital injection (as having BTLs is effectively running a business to which you are injecting the finances).

But there must be a CLEAR audit trail between the transactions for HMRC inspection for this to be permitted ...easily done though.

As I said earlier, I would pay this off the larger loan to achive your requirement for a lower LTV which (subject to future market movements) will give you more choice of lenders, for your future BTL remortgage requirements.

Still think its madness though to have remortgaged your home simply to (and I think at this point unnecessarily ) reduce the LTVs on your BTLs (unless moving to an alternative lender is priority for whatever reason) - but then it would be boring if we were all the same !!


Hope this helps... I wish you well

Holly x

vanbel

Thanks Holly. One last point to justify (in my mind) my actions!

I live in NI and house prices continue to collapse. My house is worth £340k currently. I'll never again be able to raise this type of money again to pay off BTL A entirely and reduce my LTV on BTL B - so its really now or never in my mind.

If i don't i'll be forced in the future to (1) take out a v. high %buy to let remortgage on property B at 90%+ LTV plus £2k fees and (2) remortgage property A with £2k fees.

My current plan means (1)I'm saving £35 interest per month on all interest charges, (2) in 2/3 years i can remortgage BTL B at a lower rate and (3) I dont have to spend £2k remortgaging BTL A. Grateful for one last comment on this if you have time

Thanks for all your advice. Tom

holly_hobby

Hi Tom

Prop Bs LTV - will only be an issue if you move lender (either voluntarily or involuntarity ie its currently on a consent to let arrnagement, and the current lender wants it changed to a BTl and shifted elsewhere). The current lender will not do a quick market evaluation, and say your overall LTV has increased since we advanced the monies, so you need to pay us £x amount to bring in back within paramters. Just doesn't happen - but I appreciate you are trying to fight a fire you thought would ignite.

Same goes for Property A - again the LTV only becomes an issue on changing lender

Yes you say you are saving £35 pm in interest charges (is this overall or just on the BTL arrangements ?). If its on the BTL arrangements - although you have saved £35 pm mge interest, you have £35 less taxable decutions from your gross rental income. (all things being equal)

Your actions today, are planning for anticipated future occurances ...

In 2/3 yrs - there may not be any market for new BTL mortgages (unlikely but not impossible), your status may not fit BTL lenders criteria at the time of application - due to intrim criteria amendments/additions, and/or the market could have dropped, negating somewhat the effective reduction in current LTV you have made by the overpayment.

I sound like a right sour puss .... if we were discussing savings you held it may change my thoughts, its the fact that you have obrained finance on your primary property to do this that bothers the FA side of me, but little monetary gain, and a guesstimate as to how the lower LTVs will benefit you in the future, should you wish to move BTL lenders. Additionally I say this an awful lot can change in the mge world, and I would hate for you to have gone through all this for no real benefit either financially or mge option wise .....

However, you have the monies, so we'll just have to hope that future criteria/market condtions remain constant and validate your current plan of action.

I wish you well .... as always please ensure you run your plans though with your accountant and FA ....

Holly x