Hi all

I have asked this on the mortgages board but didn't get a response

I am a big advocate of overpaying and have done so for a while - currently have 10k sat in my residential mortgage overpayment pot. I can only get it back by underpaying (nationwide) which has made me think

I have a btl mortgage at 6.29% with circa £103,500 outstanding
my residential mortgage is at 3.39% with circa £89,000 outstanding (and 10k overpayment pot) I am a lower rate tax payer

If I underpay my residential mortgage by £500 a month to use up the 10k and pay it into the btl mortgage instead could I claim the business expenses on the £500 a month interest as I am borrowing it from the residential property e.g. converting £500 a month from the btl mortgage rate of 6.29% to the residential mortgage rate of 3.39% - I know people can take lump sums out of the residential property to pay off the btl mortgage and claim the tax relief but would it work for lump sum payments?

I asked Nationwide if I could take out a lump sum but they said no as I have just gone part time and they won't use my work commission as it is unproven on a part time wage (earned 14k commission last year)

I also have nearly 10k in an isa currently earning 3% but from April will prob be earning next to nothing - should I put half of this into the btl as well (I know I can't claim tax relief on this bit). Would keep back 5k emergency money.

Before I do anything stupid just want to check I am not missing anything. My rental business makes a loss of about £600 a year after expenses so the tax implication won't be too much of a factor.

Can anyone help as to whether this is a sensible thing to do and does anyone know the rules on the tax relief side of things?

All my credit cards are on long 0% balance transfers so not the priority at the moment

I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
This discussion has been closed.
Latest MSE News and Guides

Boost your Nectar points

Get up to £25 this Saturday

MSE News

Preparing for summer

What MoneySaving things can you do now to get ready?

MSE Forum

Hot Diamonds 40% off code

Including already-reduced outlet stock

MSE Deals