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BTL - Pay off or remortgage?
KP24
Posts: 29 Forumite
Hi everyone,
The BTL mortgage on the property I have rented out ends soon and I am torn about what to do now.
Due to the current climate, the remortage rates (repayment) i am getting are crazy (around 4.9% compared to the 1.99% i am currently on!).
There is approximately £6k left to pay on the property for it to become mortgage free. I am able to pay this off and absorb the £500 early repayment charge.
What impact will paying it off have on my tax return..? I am on the lower tax band, in full time employment and have this one rental property bringing in around £7k a year profit once expenses / costs (including mortgage payments) have been deducted.
Any help would be appreciated.
Thanks
The BTL mortgage on the property I have rented out ends soon and I am torn about what to do now.
Due to the current climate, the remortage rates (repayment) i am getting are crazy (around 4.9% compared to the 1.99% i am currently on!).
There is approximately £6k left to pay on the property for it to become mortgage free. I am able to pay this off and absorb the £500 early repayment charge.
What impact will paying it off have on my tax return..? I am on the lower tax band, in full time employment and have this one rental property bringing in around £7k a year profit once expenses / costs (including mortgage payments) have been deducted.
Any help would be appreciated.
Thanks
0
Comments
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You would have the interest as an allowable expenses but restricted to the basic rate of tax. Interest only on a £6k mortgage at 4.99% would be £294 a year. Interest on a repayment may be less. So you will forego that expense which would have saved you about £58.80 a year.
to make that saving, you would have been paying out the £294, so probably you would be better off clearing the mortgage.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Hello
Just to resurrect this one.
I got my figures wrong...
I have £18k left to pay on the house. Still have the means to pay it off thankfully.
Based on this new figure and the rates on new deals (currently around 4.8%) would it still make sense for me to pay it off or get a new fixed deal?
Thanks0
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