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Interest on mortgage over 4 years
penguine
Posts: 1,101 Forumite
We're trying to work out whether to sell a rental property we own outright and put the money towards our residential mortgage, or hold onto the rental property for a few years longer.
So I'm trying to figure out how much we'd save in interest over the next 4 years on £170,000 at 2.79% (we have a fixed rate mortgage).
I've used an online calculator and come up with approx £20,000 over 4 years, is that correct?
Thanks in advance.
So I'm trying to figure out how much we'd save in interest over the next 4 years on £170,000 at 2.79% (we have a fixed rate mortgage).
I've used an online calculator and come up with approx £20,000 over 4 years, is that correct?
Thanks in advance.
0
Comments
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£170000 * 0.0279 * 4 = £189720
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Presumably the rental property is self funding? so not costing you anything at the moment.
Are you trying to reduce your outgoings so need to reduce your mortgage?
If not then you would probably do better to keep the property if you think it is likely to increase in value by more than £20,000 over the next 4 years?
Also just re-read your post, are you able to pay off the mortgage without penalty anyway?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.0 -
Don't forget the interest is a trading expense for tax purposes, so you are saving the net amount, not the gross, if you pay off the mortgage.I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.0
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Presumably the rental property is self funding? so not costing you anything at the moment.
Are you trying to reduce your outgoings so need to reduce your mortgage?
If not then you would probably do better to keep the property if you think it is likely to increase in value by more than £20,000 over the next 4 years?
Also just re-read your post, are you able to pay off the mortgage without penalty anyway?
Thanks. I wanted to be certain we were correct about the £20k figure before making any decisions on the basis of that. The £170k from the sale of the rental property would go towards the £200k mortgage on the house we live in. We're leaning towards keeping the rental property, but I just want to be certain we've got all the numbers right.0 -
kingstreet wrote: »Don't forget the interest is a trading expense for tax purposes, so you are saving the net amount, not the gross, if you pay off the mortgage.
The mortgage is for the house we live in, not the rental property.0 -
You should still be able to offset it though.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.0
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If you used the money to purchase the business asset, you can offset the interest, regardless of what you used as security, upto 100% of the value of the asset at the point you started to use it for business purposes. For example, the first date it was let.
Use the HMRC toolkit, if in doubt; or contact an accountant.I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »If you used the money to purchase the business asset, you can offset the interest, regardless of what you used as security, upto 100% of the value of the asset at the point you started to use it for business purposes. For example, the first date it was let.
Use the HMRC toolkit, if in doubt; or contact an accountant.
OK, thanks. The rental property used to be our primary residence and we paid off the mortgage before we moved out. So it sounds like this probably doesn't apply to us.0 -
A creative accountant may be able to find a way. though normaly you need a money trail.0
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