Transfering remortgage to different property or to buy-to-let?

Laurence_WMF

I own two properties, I currently let the smaller one and am living in the bigger one, but intend to move to the smaller one and let out the big one.

Currently I have an interest-only remortgage of around £45,000 on the bigger one, I own the smaller one outright.

Would I be able to switch the residential mortgage to the smaller one? If so, should I do this, or should I ask my building society to convert the remortgage into a buy-to-let (according to their official rules they would not grant permission for letting within the terms of the current mortgage)?

Many thanks,
Laurence

Tixy

For tax purposes it is often better to have a mortgage on a let property rather than on the property in which you reside (as the interest is allowable for tax purposes).

That said it would be worth looking in to how much more expensive a £45k buy to let mortgage on the larger property would be compared to the sameamount on a residential mortgage of the same value on the smaller property, and if it is still more expensive when you take in to account the tax benefit.

Laurence_WMF

Thanks Tixy,

Would either option involve applying for a mortgage as if from scratch, rather than a transfer on existing terms? A potential difficulty is that my actual salary is not very high, so if the mortgage offer is related to salary it would be less than my current mortgage.


Laurence

Laurence_WMF

Would anyone else like to offer any advice? The benefit of your wisdom would be much appreciated.

Many thanks,
Laurence

jayson043

It would involve a new mortgage application. You can't simply transfer a mortgage. Your current situation would be assigned.

booksurr

I think it rather unlikely (impossible) that your current lender would agree to transferring the mortgage to an entirely unrelated second property and, even if they did, they would presumably require you to pay their costs (new valuation survey?) for so doing. It is much more likely they would require a fresh mortgage to be taken out.

going by your previous posts you appear to have obtained consent to let against the smaller property so changing the mortgage to the larger property in which you will be living will be very counter productive since it will not entitle you to claim the interest as an allowable cost against your rental income as the loan would then have no connection at all with your rental business