Remortgage home and pay off buy to let

D123456789

Am considering remortgaging my home to pay off buy to let mortgage on rental property as there is no longer mortgage interest tax relief. Pros and cons? 

grumiofoundation

Even if you saved no tax (see below) what is the advantage on this? 

Although you no longer get tax relief on mortgage interest you get a tax credit of 20% of the interest paid. 

Edit: see link https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained-atnsv0j6j782

2nd_time_buyer

There is still the 20% tax credit on mortgage interest payments.

If the interest rate is more than 20% higher on the BTL. It could still make sense.

There is also the issue of balancing LTVs to ensure you are on the best rates allround.

D123456789

Thankyou both, I need to look at this as I am not sure that I have been claiming the 20 % back. 

2nd_time_buyer

Yes, it is pretty confusing on the tax return.

If you are borrowing money explicitly for financing BTL then the tax credit does not necessarily need to be related just to the BTL mortgage. So in theory if you remortgage your main property to release equity to refinance the BTL you could still claim tax credit on the additional lending. Your current lender may or not allow you to remortgage for this reason though.

It is a grey area though so worth checking with HMRC.

dimbo61

Of course you can still claim the 20% Tax relief on the Interest part of a mortgage taken out to pay off a BTL mortgage.
Your accountant can explain this.
There is also huge savings on Interest to be made by switching from a BTL mortgage to a residential mortgage.
You still owe the money so paying the cheapest Interest rate possible is always a good idea