Mortgage flat to pay off house

carling21

Hi everyone.
Mortgages and tax not my thing so I'm hoping someone on here can give me some advice.
I currently own a flat which is mortgage free and I rent this out. The current value of the flat is estimated at £60k.
My residential property has a mortgage which has a balance of £63k remaining with approx. 60% LTV.
How practical is it to remortgage the flat and use this money and some savings to pay off my main residence?
Would I also be able to offset the interest from the flat against the tax I pay for rental income?
My main concern is security, as it's obviously better for me and my family to have a mortgage free 3 bedroom house than a mortgage free 2 bedroom flat, if ,say, one of us became unemployed or worse.
Your help and opinions would be much appreciated.

ACG

You can currently offset the interest yes, that will be changing soon.
Speak to an accountant - its a business expense

amnblog

You will struggle to claim tax relief on lending that was not used to acquire the property Carling.


Consultant an Accountant before you do anything else.

antrobus

carling21 wrote: »

...I currently own a flat which is mortgage free and I rent this out. The current value of the flat is estimated at £60k....

That's not the important number. The important number is the valuation of the flat when you first started renting it out.

carling21 wrote: »

....Would I also be able to offset the interest from the flat against the tax I pay for rental income?.....

Yes. But ....

If you increase your mortgage loan on your buy-to-let property you can also treat interest on the additional loan as a revenue expense but only up to the capital value of the property when it was brought into your letting business.
https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rent

Thus the important number is the valuation of the flat when you first started renting it out.