BTL and residential Mortgages

TonyBay

Hi All,
Does having a buy to let mortgage affect the ability to get a future residential mortgage. The buy to let I would receive no rental income and it is simply an interest only repayment mortgage in which the tenant just pays the amount due and I get no income from it (family!).

But in a couple years time i want to move. Will this BTL mortgage affect the amount that I can borrow for a residential mortgage?
Thanks in advance.

anselld

Don’t kid yourself it’s not income. HMRC will not see it that way.

AdrianC

TonyBay wrote: »

Does having a buy to let mortgage affect the ability to get a future residential mortgage.

It may well do.

The buy to let I would receive no rental income and it is simply an interest only repayment mortgage in which the tenant just pays the amount due and I get no income from it (family!).

So a regulated tenancy on a below-market-value rent?
After maintenance etc, you're making a loss on it?
Good luck...


And don't forget that the income after allowable expenses is still being taxed, because interest is ceasing to be a deductible expense on your tax return.

But in a couple years time i want to move. Will this BTL mortgage affect the amount that I can borrow for a residential mortgage?

Don't forget the +3% SDLT, if you don't already own your own primary residence.

need_an_answer

You may find that not all lenders will be willing to offer BTL deals when they are told that the tenant is family.

pjcox2005

AdrianC wrote: »

And don't forget that the income after allowable expenses is still being taxed, because interest is ceasing to be a deductible expense on your tax return.
QUOTE]



For high rate taxpayers, not for those on basic rate so this may not actually apply to the OP. In which case, if the income is the same as the interest then no tax liability although it should be disclosed still to HMRC.

MEM62

TonyBay wrote: »

Hi All,
Does having a buy to let mortgage affect the ability to get a future residential mortgage. The buy to let I would receive no rental income and it is simply an interest only repayment mortgage in which the tenant just pays the amount due and I get no income from it (family!).

Yes, you will. Anything that your relative / tenant pays to the mortgage company will be considered income for tax purposes. Do not confuse income with profit.

But in a couple years time i want to move. Will this BTL mortgage affect the amount that I can borrow for a residential mortgage?

It will be taken into consideration but will have a minimal effect providing you have a steady income stream and it is covering it's cost.

Thanks in advance.

........................

MEM62

AdrianC wrote: »

And don't forget that the income after allowable expenses is still being taxed, because interest is ceasing to be a deductible expense on your tax return.

I am not so sure.

I believe that tax relief I=on mortgage interest will still apply but that it is being reduced to 20%. (Currently 40% tax payer get relief at 40%)

AdrianC

pjcox2005 wrote: »

For high rate taxpayers, not for those on basic rate

Indeed. Currently. How confident are you that'll not change?

G_M

AdrianC wrote: »

Indeed. Currently. How confident are you that'll not change?

AdrianC

That's not even the most likely cause...

MEM62

AdrianC wrote: »

Indeed. Currently. How confident are you that'll not change?

I think I may have mentioned on previous posts that I may sell if Corbin gets in power.

As it stands I originally had more that just financial reasons for not selling when Kate and I bought our house. The first being that I was going from living on my own for 20 years to moving in with her and two teenage kids. That is a risk and we wanted a plan B if it really didn't work out. (Not romantic I grant you but when you are both middle aged and divorced it is easier to accept that things do not always work out the way that you want them to) The other reason is that I moved out to Hampshire and my property is in West London. If we ever wanted to move back to West London there is no way we could afford it if we sold the flat.

From an investment viewpoint it returns about 3.5% after costs but excluding any increase in the value of the property. That does not compare well with the stock market over time but I am content to let it sit there for the time being. If any further changes in legislation reduces the return on it much further or makes it more difficult / onerous to be a landlord then I'll probably bail.

I have often joked with Kate that we should sell it, quit work and go live on a Greek island and only return when the money runs out.