Mortgage Options

Ashs

So if I overpay on my new mortgage I won't get charged tax.

Help me on this. I literally just moved out of my old house into a new one and started renting my old one out so I basically just have 2 mortgages.

How will anyone find out that I'm not paying tax?

Bufger

Ashs wrote: »

So if I overpay on my new mortgage I won't get charged tax.

Help me on this. I literally just moved out of my old house into a new one and started renting my old one out so I basically just have 2 mortgages.

How will anyone find out that I'm not paying tax?

Becuase it'll be quite clear that you have a Buy to Let mortgage which is a taxable income. They'll see this, check it ties in with your tax records and the fine you and backdate the payments leaving you in a right old mess.

Everyone else pays their taxes (except for Jimmy Car and Starbucks) so why dont you?

Let_Us_See

Far too often the assumptions and advise given on this forum is really worrying.

Batsman81

Ashs wrote: »

So if I overpay on my new mortgage I won't get charged tax.

OK so, currently you're IO mortgage is 285. If you start overpaying this, then that figure will decrease - lets say, overtime it goes down to 200. That means you make more profit, and hence have to pay more tax.

If on the other hand, you keep the figure of 285 of IO mortgage by not overpaying, and overpay on your main house, you're tax won't increase as you're profit wont increase on your rental property.

In any case, just do everything by the books - you can sleep a lot easier without worrying.

Let_Us_See

I will merely apply myself to the information requested in your original post.

Your concern is that in 19 years you will still owe £140,000 and this issue is exacerbated by the £40,000 negative equity and current affordability is not an issue?


Obviously, simply selling and redeeming the mortgage is not currently possible due to negative equity, and changing to a repayment mortgage has apparently been declined by your lender.




You have a couple of option to explore:

1. As the mortgage is self-financing consider making overpayments to reduce borrowing (most lenders permit 10% capital repayments a year without penalty) to eliminate negative equity at which point the property can be sold. With this option there would be no need to, as you put it, to "increase your deposit."
2. As above in 1, and maintain for rest of term with the possible of completely repaying all the capital or a large slice of it.
3. You don't mention if you have a current residential mortgage, only that you use rental income towards paying bills in your current house. However, if you do have a current residential mortgage is there a possibility of selling the property and adding the £40,000 negative equity to your current mortgage?

As an aside I would recommend you declare all profit (not income) from the rented property and this CANNOT be offset against residential mortgage for tax purposes (although it can be used to reduce any residential mortgage). Hope this helps.

Ashs

My mortgage on the house I am renting isn't a buy to let mortgage. It's still the same mortgage I had when I lived there. I simply moved into my new house which is another personal mortgage and started renting my old one out. So it's as if I still live there in the eyes of Lloyds tsb really? Where does that leave me

Let_Us_See

My mortgage on the house I am renting isn't a buy to let mortgage. It's still the same mortgage I had when I lived there. I simply moved into my new house which is another personal mortgage and started renting my old one out. So it's as if I still live there in the eyes of Lloyds tsb really? Where does that leave me

I am now a little confused as to your "where does this leave me." In a previous post you stated you had Consent To Let and therefore Lloyds TSB would obviously assume you where no longer living at that property and renting would not be an issue. Therefore, nothing has changed from your original post, and my advice concerning your options remains the same.

jamesml

If I'm honest, I'd be worried if the property hasn't regained the £40k negative equity in 20 years time, or at least at some point in that timeframe.

You seem to be pretty contrary - do Lloyds definitely know you are renting it out?


As has been said, make overpayments on the mortgage and that will help the situation, reducing what you owe in 19 years time.

Ashs

But do you really think the house will gain £40k in next 20 years....?

sockpuppet

Let_Us_See wrote: »

Far too often the assumptions and advise given on this forum is really worrying.

Advice - is with a C

You adviSe people - but you give adviCe

You would be an AdviSor

( I have a degree in english language)