Change Mortgage from Interest Only to Repayment

plittlefield

Hello All,

I have 2 buy-to-let interest only mortages that I would like to change to repayment.

The independant mortage company I used to set these up 7 years ago has now gone.

What are my options please?

Thanks.

getmore4less

Could just over pay when you want.

glosoli

Exactly - you could just set your repayments to what they would be on a capital and interest basis and then if your circumstances changed in future you could reduce them down again, at least that way you have options for future.

plittlefield

Thanks, that's a neat idea.

*~Zephyr~*

plittlefield wrote: »

Hello All,

I have 2 buy-to-let interest only mortages that I would like to change to repayment.

The independant mortage company I used to set these up 7 years ago has now gone.

What are my options please?

Thanks.

Why on earth do you want to do that???

You do know that only the interest is tax-deductible right? And you can't offset any overpayments against your tax bill either.

You're thinking about this like a regular homeowner. BTL mortgages are a business expenses, not a domestic, homeowner expense. Theres no sense in converting it to repayment OR overpaying it.

glosoli

*~Zephyr~* wrote: »

Why on earth do you want to do that???

You do know that only the interest is tax-deductible right? And you can't offset any overpayments against your tax bill either.

You're thinking about this like a regular homeowner. BTL mortgages are a business expenses, not a domestic, homeowner expense. Theres no sense in converting it to repayment OR overpaying it.

I am unclear on the changes to the tax system regarding buy to lets, however is it not the case that the change was interest is no longer tax deductible?

plittlefield

The new Tax system for Landlord's is a little odd.

For example, this page does not paint a good picture...

http://www.themortgageworks.co.uk/support/new_tax_system

...but this page has one example where it appears to be exactly the same end result and profit!

http://www.themortgageworks.co.uk/support/tax_relief_changes#examples_-_how_your_clients_profitability_could_be_affected

Go figure.

@*~Zephyr~* - Yes, I know that this for me is 'primarily' a business, but I am looking longer term and really need to start bringing my "debt" down.

:-)

Paul

ViolaLass

*~Zephyr~* wrote: »

Why on earth do you want to do that???

You do know that only the interest is tax-deductible right? And you can't offset any overpayments against your tax bill either.

You're thinking about this like a regular homeowner. BTL mortgages are a business expenses, not a domestic, homeowner expense. Theres no sense in converting it to repayment OR overpaying it.

Maybe the OP would like to start paying less interest. It's not necessarily a bad idea, even with the tax break.

Thrugelmir

plittlefield wrote: »

...but this page has one example where it appears to be exactly the same end result and profit!

http://www.themortgageworks.co.uk/support/tax_relief_changes#examples_-_how_your_clients_profitability_could_be_affected

Go figure.

Doesn't impact taxpayers in the 20% band. Once in the 40% band. There's an impact. Increasing taxable earnings may well have unintended consequences.

Many people overlook the CGT liability they'll incur on realisation of the profit when selling the property. Always best to seek professional advice to gain a full understanding before taking any action.

plittlefield

Agreed. I shall contact my Accountants and check all my options... just thought I would post here as a 'starter for ten' :-)

Thrugelmir

plittlefield wrote: »

Agreed. I shall contact my Accountants and check all my options... just thought I would post here as a 'starter for ten' :-)

You need to factor all your circumstances into the equation. Not just the BTL properties.