Using rent to pay another mortgage

prowla

The have been a couple of comments regarding a BTL mortgage - that's not it...

As I read it, the OP wants a mortgage to buy a new property to live in, whilst renting out their current fully-owned property.

The mortgage would not be for a BTL.

Mr.Generous

mrbonds said:

sheramber said:

you cannot deduct any capital repayment of the BTL mortgage from your rental income for tax purposes.

You can claim a credit from your tax due by calculating 20% of the interest paid. 

If you don’t work what is your income?
  If you are on means tested benefits then  the value of a BTL will  be considered as capital. 

Hi. This will not be BTL . Just a normal mortgage on the new property.   Sorry it confusing 

Then sure, you can do it. Convince a mortgage lender you have enough income to borrow, build a reserve emergency fund for any sudden expenses and think of the long term gain. The rent is amazing - must be London. Who on earth can afford it!!

BikingBud

Mr.Generous said:

mrbonds said:

sheramber said:

you cannot deduct any capital repayment of the BTL mortgage from your rental income for tax purposes.

You can claim a credit from your tax due by calculating 20% of the interest paid. 

If you don’t work what is your income?
  If you are on means tested benefits then  the value of a BTL will  be considered as capital. 

Hi. This will not be BTL . Just a normal mortgage on the new property.   Sorry it confusing 

Then sure, you can do it. Convince a mortgage lender you have enough income to borrow, build a reserve emergency fund for any sudden expenses and think of the long term gain. The rent is amazing - must be London. Who on earth can afford it!!

Who can afford not to?

silvercar

prowla said:

The have been a couple of comments regarding a BTL mortgage - that's not it...

As I read it, the OP wants a mortgage to buy a new property to live in, whilst renting out their current fully-owned property.

The mortgage would not be for a BTL.

A residential mortgage on the new property, the purpose of which is to enable someone to keep their current home rather than selling it. The purpose of the mortgage is to have a rental property, as such the interest payments are an allowable expense. Restricted to the interest on the value of the property when first let. You’d have to document this carefully to ensure that hmrc understands this if they question it. There is no obligation to have the mortgage secured on the actual property that is let, in fact it could be an unsecured loan, it’s the purpose that counts.

kingstreet

If your only income is rent you will need two years' tax calculations and tax year overviews to be able to use the income in affordability for a residential mortgage.

A more efficient route would be to raise a let to buy mortgage on the current property and use that to purchase the residential but you will only be able to borrow the lower of 75% of the valuation; or the maximum based on affordability using the rental income.

Get broker help with this as it will be easy to make a mess of it.

As has been stated you will have second property stamp duty surcharge in England or the equivalent in Scotland/Wales.

mrbonds

Mr.Generous said:

mrbonds said:

sheramber said:

you cannot deduct any capital repayment of the BTL mortgage from your rental income for tax purposes.

You can claim a credit from your tax due by calculating 20% of the interest paid. 

If you don’t work what is your income?
  If you are on means tested benefits then  the value of a BTL will  be considered as capital. 

Hi. This will not be BTL . Just a normal mortgage on the new property.   Sorry it confusing 

Then sure, you can do it. Convince a mortgage lender you have enough income to borrow, build a reserve emergency fund for any sudden expenses and think of the long term gain. The rent is amazing - must be London. Who on earth can afford it!!

It's Edinburgh city centre so property worth about £250k. I was looking at a small house of about £110k in Lockerbie.   I've got it in writing that the rent will be £1500- £1800 from letting agency (regardless of occupancy). 5 years but options to keep renewing. 

mrbonds

kingstreet said:

If your only income is rent you will need two years' tax calculations and tax year overviews to be able to use the income in affordability for a residential mortgage.

A more efficient route would be to raise a let to buy mortgage on the current property and use that to purchase the residential but you will only be able to borrow the lower of 75% of the valuation; or the maximum based on affordability using the rental income.

Get broker help with this as it will be easy to make a mess of it.

As has been stated you will have second property stamp duty surcharge in England or the equivalent in Scotland/Wales.

Does the stamp duty get added to the amount of is it a one off fee upfront?

grumpy_codger

>> Stamp Duty Calculator 2025: How much & when to pay it - MSE

BikingBud

mrbonds said:

kingstreet said:

If your only income is rent you will need two years' tax calculations and tax year overviews to be able to use the income in affordability for a residential mortgage.

A more efficient route would be to raise a let to buy mortgage on the current property and use that to purchase the residential but you will only be able to borrow the lower of 75% of the valuation; or the maximum based on affordability using the rental income.

Get broker help with this as it will be easy to make a mess of it.

As has been stated you will have second property stamp duty surcharge in England or the equivalent in Scotland/Wales.

Does the stamp duty get added to the amount of is it a one off fee upfront?

To which amount?

I feel you need to spend some time investigating all costs and all potential benefits before you commit to anything.

mrbonds

BikingBud said:

mrbonds said:

kingstreet said:

If your only income is rent you will need two years' tax calculations and tax year overviews to be able to use the income in affordability for a residential mortgage.

A more efficient route would be to raise a let to buy mortgage on the current property and use that to purchase the residential but you will only be able to borrow the lower of 75% of the valuation; or the maximum based on affordability using the rental income.

Get broker help with this as it will be easy to make a mess of it.

As has been stated you will have second property stamp duty surcharge in England or the equivalent in Scotland/Wales.

Does the stamp duty get added to the amount of is it a one off fee upfront?

To which amount?

I feel you need to spend some time investigating all costs and all potential benefits before you commit to anything.

Added to the mortgage payments I mean