Buy to Let v Remortgage Residential Mortgage

Tadpole78

We're thinking of buying a rental property, and having paid off our own residential mortgage we were thinking of rather than taking out a BTL mortgage, we could remortgage our own house and release equity to finance the purchase of the rental house (mortgage would be around 60% value of our home). 

I assume as long as we've proof of funds, there's no reason we couldn't do this, or am I missing something?

Also, I'm aware that you can get tax relief on mortgage interest payments on a rental property, but does this need to be a BTL mortgage (i.e. could we avail of this if we went the remortgage route)?

Conscious there's alot of tax implications that may not make it worth it for us (husband is in 40% band), so I know we'll need to see an accountant, but just trying to get a feel if it's even worthwhile before spending more money on an accountant.

Trying to weigh it up while making sure we're taking everything into account.  

silvercar

Also, I'm aware that you can get tax relief on mortgage interest payments on a rental property, but does this need to be a BTL mortgage (i.e. could we avail of this if we went the remortgage route)?

You get tax relief (pedantically, the interest can be considered an expense restricted to the basic rate) depending on the purpose of the borrowing. It can be secured on the BTL property or your home, or indeed an unsecured loan. 

The risk is that your residential home is at risk should you fail to keep up with repayments…

How easy it is to borrow against your home I don’t know, the reason would need to be declared, but it would be the same as borrowing on your home to fund a business plan.

Tadpole78

silvercar said:

Also, I'm aware that you can get tax relief on mortgage interest payments on a rental property, but does this need to be a BTL mortgage (i.e. could we avail of this if we went the remortgage route)?

You get tax relief (pedantically, the interest can be considered an expense restricted to the basic rate) depending on the purpose of the borrowing. It can be secured on the BTL property or your home, or indeed an unsecured loan. 

The risk is that your residential home is at risk should you fail to keep up with repayments…

How easy it is to borrow against your home I don’t know, the reason would need to be declared, but it would be the same as borrowing on your home to fund a business plan.

Thanks.  The way I' looking at it is, if for whatever reason we couldn't keep up repayments, I'd be liable regardless for that amount, but ultimately would sell the rental home.  Though I'd hope that it wouldn't come to that, as the rent is more than the mortgage payments, and even if we had no tenants, it's the same as what we'd been paying on our own mortgage until last year (and our circumstances haven't changed).  
I'm not looking to make an income out of the rental per se, more that I've a decent deposit and thought it's a decent way to invest it (plus, it'd be a student house and would hope my own children would make use of it in 2 years time).

Gary1237

Tadpole78  how did you get on with the purchase - did it all go to plan