Buy to let- pay off?

busy_b

We drifted into Buy To Let as we’re self employed and did the usual panicking about pensions thing. We only Let to family and friends for very little, if any profit.
We have 45k in savings and 20k in ISA’s. We need the ISA’s as back up for our small business and a rainy day. However, we want to know the best way of using the 45k.

I am inclined to offset it against our home mortgage and have gained some great advice on this site on how to go about this. However, it has occurred to me that it may be better to reduce the Buy to Let mortgages.

This is how we stand at the moment:-

Own home mortgage 36k (home valued at 250k)
We pay off approx £435 per month and have approx 10 yrs left.

1st Buy To let property, we own outright valued at 90k – receive £320 per month rent

2nd B T L Mortgage 35k -
property valued at 140k – receive £500 per month rent – mortgage payment is £240 per month (Repayment mortgage)

3rd B T L Mortgage 27k
property valued at 130k – no rent received – family member lives here rent free. Mortgage payment = £320.00 per month (Repayment mortgage)

4th B T L Mortgage 68k
property valued at 145k (50k of our own savings put down to purchase property). – receive £500.00 per month rent – mortgage payment is £430 approx Interest Only.

I would prefer to be Mortgage Free in my own home and let the Buy to Let’s take care of themselves, but it’s a huge decision and so would be happy to hear from anyone with advice.

Doozergirl

You get tax relief against the mortgage payments on a BTL. I think you should pay off your own mortgage first.

busy_b

Thank you, that's what I thought... We asked our accountant for his advice and he said, " it's whatever feels best for you"
We're changing our accountant :rolleyes:

Doozergirl

busy_b wrote: »

" it's whatever feels best for you"

Superb news! I shall stop paying tax immediately!

Thanks :beer:

FBThree

I'm with you - pay off home mortgage, then if you ever get in difficulties your own home is protected. Set off BTL interest against BTL rent.

djbd1973

Are you earning less on the interest on your savings than on the interest rates on youe mortgages?

busy_b

Yes, unfortunately my savings have been sat in a bog standard savings account for 12 months, whilst we have had some work done on our own property. The interest we receive at the moment is about 4.35% so I know I've got to make a decision soon.

We know we could get better mortgages on the Buy to Let's too but it's having the time to sort them out.

Gorgeous_George

The simple rule of thumb is to pay off the largest IR mortgages first. You are probably paying more for your BTL mortgages than for your residential mortgage so pay them off first.

For tax purposes, it is the reason for the loan, not the property that it is secured against, that determines whether interest can be counted as legitimate expense.



GG

djbd1973

busy_b wrote: »

Yes, unfortunately my savings have been sat in a bog standard savings account for 12 months, whilst we have had some work done on our own property. The interest we receive at the moment is about 4.35% so I know I've got to make a decision soon.

We know we could get better mortgages on the Buy to Let's too but it's having the time to sort them out.

Georgeous George is right. I would say you need to make the time to sort it especially if you potentially losing alot of money through inertia. If you work out what you could save/make over say a six month period, they may spur you on to getting it sorted. I have a to do list that never gets cleared but the ones that cost me the most get sorted as I hate giving money away when I don't have to. Good luck

scrummy_mummy_2

I have just secured a really great deal with London and Country (Through the Motley Fool) on one of my BTL mortgages...it's with the Woolwich and is base plus 0.49% for the lifetime of the mortgage!!! It's better than my residential deal at base plus 0.79%
Contact Adam Griffiths 01225 341361....he was really helpful and the process was very efficient.
Don't let inertia get the better of you...that's how big companies make even bigger profits!

maxmycardagain

sell BTL 3, its getting you no money, and the equity will pay off ALL your mortgages.......