taking out residential mortgage to pay of BTL Mortgage

UKSBD

I currently have;


Property A - £280,000 value with a £60k BTL mortgage on it


Property B - Main residence, £350,000 value with no mortgage.


I want to take out £60k mortgage on property B to pay off property A


When filling in any forms it always asks about existing mortgages, but the whole idea is to get the new mortgage to pay of the existing one.


Will some in a branch factor in that their won't be 2 mortgages if I take out the2nd one and what type of mortgage is this classed as?

Thrugelmir

What is the aim of moving mortgages between properties?

amnblog

It can be done but you may find lenders to be a pain about it.

UKSBD

Thrugelmir wrote: »

What is the aim of moving mortgages between properties?

Current BTL is Interest only, 2 year deal ends soon, it seems to make more sense to switch to residential mortgage as rates appear to be far better than BTL rates (even accounting for the tax)

Thrugelmir

UKSBD wrote: »

Current BTL is Interest only, 2 year deal ends soon, it seems to make more sense to switch to residential mortgage as rates appear to be far better than BTL rates (even accounting for the tax)

Then also a question of the lenders internal criteria as to the purpose of the remortgage. Not all lenders will be interested in such business.

enthusiasticsaver

Usually yes residential mortgages are a lower interest rate than BTL. We raised one on our main house when our mortgage was paid off to buy a flat for our daughter to live in when she was doing post grad study. We had no difficulties doing it but we had no existing mortgage.

Your difficulty may come in that you already have a mortgage on one. Some lenders may agree to that if they do the actual redemption of the existing mortgage so you will need to explain that. Otherwise they may only lend on the basis that you keep both which means your income would have to be substantial. Having said that as the mortgage is only £60k and most lenders will do at least 4 times income you would only need an income of £30k for it to not be an issue (not including the rent on the BTL which they may not accept). Whichever way it is done you need to declare the existing mortgage and explain the purpose of the new mortgage is to pay off existing borrowing.

UKSBD

it's crazy, all I really want to do is move the mortgage from one property to the other but the system doesn't appear to allow it


The money will be used to pay of the mortgage so implying on the forms that I will have 2 mortgages doesn't make sense.

dimbo61

You need to show a Clear line between paying off the Interest Only BTL mortgage and taking out the Repayment Residential mortgage in order to prove to the TAX man that you have done this to reduce your costs ( mortgage)
You can only offset the Interest only part of the mortgage payment against your profit from renting

UKSBD

dimbo61 wrote: »

You need to show a Clear line between paying off the Interest Only BTL mortgage and taking out the Repayment Residential mortgage in order to prove to the TAX man that you have done this to reduce your costs ( mortgage)
You can only offset the Interest only part of the mortgage payment against your profit from renting

The property I am renting out will be mortgage free.


The new mortgage will be on our main residence, I wasn't intending to claim the interest on the residential mortgage against the rent I'm earning.


The difference in rates still make it work out cheaper.

Time2go

Dimbos advice re tax is incorrect. You would be able to offset interest paid on loan up to either value of property at purchase or date first let whichever is lower. People refinance all the time and never seen hmrc disallow it

UKSBD

Time2go wrote: »

Dimbos advice re tax is incorrect. You would be able to offset interest paid on loan up to either value of property at purchase or date first let whichever is lower. People refinance all the time and never seen hmrc disallow it

Does that mean that if you had a main residence with no mortgage on it you could remortgage it, use the money raised to buy a BTL and still claim the tax on the interest element back?