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Pay off buy to let mortgage?
Keshav
Posts: 2 Newbie
Hi. I have a btl property and wondered if I should make over payments to try and reduce payments in the future. Thing is I don't know if I should because it's a repayment mortgage and when I pay tax on the 'income' the interest I pay is deducted so I don't know if I should bother making more repayments.
Bank accpunts have poor interest rates so not like I'm gaining much from saving. But I don't want to pay more tax by paying off as much of the mortgage as possible.
Any suggestions would be greatly appreciated.
Thanks
Bank accpunts have poor interest rates so not like I'm gaining much from saving. But I don't want to pay more tax by paying off as much of the mortgage as possible.
Any suggestions would be greatly appreciated.
Thanks
0
Comments
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If you leave a bigger outstanding on the mortgage, you 'save' 20/40% of the interest by not paying tax to the gvt, but you're still paying the remaining interest to the bank! Unless you're opposed to paying the gvt and would rather pay more to the bank to avoid the greedy tax man getting his mitts on your profit.
The basic equation is: If Savings interest rate < 0.8*Mortgage interest rate then PAY OFF
Somehow I think that will always be the case. Ofcourse make sure you have enough funds easily accessible for repairs, voids, insurance, etc0 -
Thanks for the reply. Much appreciated0
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nah dont pay off. even if savings is more then mortgage interest you dont wnt money tied up in an illiquid asset....0
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