Best way to borrow - residential vs. landlord

Tirian

As of early next year I will have two unmortgaged properties (solely owned by myself), one residential and one let out.  I am an additional rate taxpayer.

I may, later in the year, have a need to borrow a modest amount (maybe £30-70k on a max 15-20 year term)

The most cost effective way to do so seems likely to be a mortgage against one or other of the properties.  Is it likely to be financially more effective for me to borrow against the residential or the tenanted property?

pramsay13

Do you need to borrow for 15 - 20 years?
If not you will need to keep an eye on early repayment charges otherwise it might be better getting a loan.
Generally you will get better rates on a residential mortgage but depending on your situation it might be foolish borrowing against the property you are living in. 
There also may be restrictions on what you can use the borrowed money for so you will need to check. 

Tirian

Interesting about the restrictions.  So I would be potentially better off just retaining the amount and remortgaging lower rather than paying off the residential mortgage in full in Jan .. even though the end position would be the same, I wouldn't need to worry bout restrictions.

I prob won't need for 15-20 years but I'm assuming that a 2-5 year fix is most likely, so would be chance to reduce/repay without penalty well before then.

I'm aware residential rates are lower but I think there is still (much reduced) tax benefit if borrowing against the let property?  Probably not enough to make it financially superior though I'm guessing

What would you say the potential prob with borrowing against my residential would be?  

kingstreet

If you are borrowing for an allowable business purpose, what you secure the lending on is irrelevant. You can use the residential or let property as security and the tax treatment is the same.