penalty for having 2 houses / mortgages?

Paul176

Hi

im in the Army and about 17 years ago my wife and i bought a fairly low priced house which we have since rented out to cover the mortgage costs whilst the Army provides us with a married quarter to live in.

i leave the army next year after 22 years and have always assumed that we would sell the house and buy something in an area we want to setle,

Someone sugested that we keep the house that we rent out and leave the tennents in there until the mortgage is paid off. Then buy another house by putting down the 50K the army gives me when i leave as a deposit which will leave me with a smaller mortgage.

Whats the best thing to do? Have 1 big mortgage for 2 houses or 2 seperate mortgages? Is there a kind of penalty for doing either?

Thanks for any advice...

beingjdc

Well, there's no penalty as such but in the one case you'll pay BTL interest rates on all your borrowing, whereas in the other you'll pay two lots of arrangement fee.

The main concern is probably tax - if the one you're renting out is mortgaged so that the rent and the mortgage interest are the same or thereabouts, you won't pay tax on the rent.

Personally though, given the market at the moment, I would sell up and put the money in a mixture of cash and shares. Or gold