Transferring of Equity to Pay off Home Mortgage

sun8eam

Hi,

Wondered if anyone might be able to advise on the below. I currently own 2 properties (as below). I currently live in Property A where the mortgage is quite low & manageable.
I have the intention of moving to the other house, to eventually live there and make it my main home. I will then rent out House A on a BTL mortgage.

I am thinking of loaning some of the equity that has been built up in Property A and then use this amount to pay off some or most of the £147K loan in the other house. Am I right in thinking that it is best to have the majority of the loan on my BTL mortgage as this can be offset against the profit you make from renting out the property?

Just wandered how best to go about this if this is the best way to manage both properties.

Property A Value £200K approx..
Outstanding Mort £40K
Current Interest Rate 2.5% with Nationwide - Variable Rate
Remaining Term 15 Years

Property B Value £240K approx.
Outstanding Mort £147K
Current Interest Rate 2.5% with C&G - Variable Rate
Remaining Term 19 Years


Thanks for any advice on this.

Sun8eam.

G_M

Provided the money you raiseis used to fund the let property, it does not matter which property the mortgage is on.

You may be able to stay on your current lowmortgage if thelender will grant Consent To Let- cheaper than aBTLmortgage.

New Landlords (information for new or prospective landlords)

00ec25

a BTL mortgage usually requires a 25% deposit minimum so in theory with those values you could get a near 75% LTV (BTL) mortgage on property A and pay off the entire loan on property B if you want

I have no idea whether a 75% LTV would be an an "acceptable" interest rate but a simple comparison against the mortgage rate for a residential loan with CTL would be worthwhile (assuming you can get CTL on property A - preferably for an open ended period)

the entire loan on property A would remain an eligible cost against the BTL business since you have "withdrawn capital" (see HMRC example 2 http://www.hmrc.gov.uk/manuals/bimmanual/bim45700.htm ) but remained within the total value of the property (£200k) at the point the letting business commenced (ie the capital account is not overdrawn)