Buy to let mortgage question

ambercelery

Hi
I currently have a mortgage on the property that I live in - and also a mortgage on a buy to let flat I bought two years ago. Both mortgages are repayment mortgages, so when completing my tax return I do not have to pay income tax on the part of the income from the flat which pays for the mortgage interest, I therefore subtract the annual interest that I have paid from my annual income from the flat - to get the amount that I have earnt from this property.

I am soon thinking of remortgaging (at the end of my current term on both mortgages). Is it ok for me to - for example - increase the size of my loan on my buy to let mortgage - and reduce the amount i need to borrow from my own residential property. i.e. if I were to take out an extra 20000 from the buy to let mortgage, I could effectivly increase the interest part of the mortgage, thereby more of the income being income-tax free and I could put the 20000 down into my residential mortgage as an overpayment to reduce my residential loan.

Is there something i have overlooked?

silvercar

looks OK.

You only get tax relief on the interest element of the let property upto the property value when you started letting it.

There is actually no reason why you can't secure some of the money borrowed to fund the BTL on your residential home. As long as you can establish a paper trial to identify the part of the mortgage that was to fund the let property, the interest is an allowable expense.

ambercelery

When i bought the flat it was x thousand pounds, and I had to pay 20% in cash for the mortgage i went with.

Therefore I could take the 20% back out of the mortgage (if they allow me) - and therefore my total loan will be the same as the price of the flat when i originally started letting it.

that means i can put the 20% which i had as a deposit, into my own house as an overpayment