HELP: Buy-to-let mortgage advice

vanbel

Dear all.

I'm a reluctant landlord with a main residence and a buy-to-let property. My main mortgage is £236k. My buy to let is £125k.
I am in the position to now remortgage my main residence - possibly up to £286k (£50k more than I actually need to redeem the mortgage with my previous lender).

If I use the additional £50k capital to pay off part of the buy-to-let can I still get tax relief on the interest paid on this sum, even though it is part of a traditional mortgage? i.e. In my tax return can I declare the interest paid on the £125K buy-to-let mortgage as well as the interest paid on the £50k part of the traditional morgage (which is on the main residence). If so, is this just a general calculation?

A key aim is to get the Buy-to-let mortgage down to a level that will make a future 60% LTV possible.

Great if anyone has advice on this.

holly_hobby

Yes you can (interest only don't forget !) - please ensure that you retain a clear audit trail between the 2 events, and you must not offset any part of your residential mortgage (or associated rmge fees) that have not via equity release directly funded or been invested into the business.

You'll of course need to verify with your chosen remortgage lender that the purpose of equity release, is permissible under their criteria.

Affordability will also be based on your earned income, with full status and income checks.

Hope this helps
Holly

vanbel

Cheers Holly. Your advice is greatly appreciated. Do you know how aften HMR revenue actually look at this sort of detail? Also, once the mortgage company release the money do they ever check whether what they were told the money was for (e.g. refurbishment money actually used for another loan repayment) actually occured? Thanks. T

holly_hobby

Apple in a barrel stuff, they may never ask, they may ask as soon as you submit your first SA inc this - but if this is what you're doing, there will be an audit trail won't there ?

Ie you can provide os balance details pre remortgage, provide new borrowing details from the Solicitor on competion, and obtain a copy of the pre and post lumpsum balance from your BTL lender.

If you can't provide a satisfactory audit trail to HMRC on request (inc any associated fees being offset) , the upshot will be that they do not permit the deduction, and you'll have to absorb the costs.

But really, as you know in advance what is reqd, I can't think of why or an instance where you wouldn't be able to satisfy any of their requirements.

Speak to your accountant - he'll manage this for you.

Hope this helps

Holly