Remortgage/new purchase advice needed please!

Fazzy123

Hi all,

I currently have a buy to let property and my own residential property which I live in. The house I live in is currently mortgage free, I plan to remortgage it using a buy to let mortgage for a LTV of 75% and purchase another property in which I will live in. I will need a small residential mortgage too to cover the purchase of the new property. 

The overall plan is to have 2 properties which are tenanted, the rent received from them would be more than enough to cover the residential mortgage payments for the new property and leave enough for tax, repairs and void periods. 

Although, in my head it all makes sense, can anyone spot any drawbacks or a smarter way in achieving this? I understand I will have to pay a higher rate on the stamp duty but I’m quite comfortable with that. 

Your advice/views are all welcomed! 

Thank you for your time. 

poseidon1

Fazzy123 said:

Hi all,

I currently have a buy to let property and my own residential property which I live in. The house I live in is currently mortgage free, I plan to remortgage it using a buy to let mortgage for a LTV of 75% and purchase another property in which I will live in. I will need a small residential mortgage too to cover the purchase of the new property. 

The overall plan is to have 2 properties which are tenanted, the rent received from them would be more than enough to cover the residential mortgage payments for the new property and leave enough for tax, repairs and void periods. 

Although, in my head it all makes sense, can anyone spot any drawbacks or a smarter way in achieving this? I understand I will have to pay a higher rate on the stamp duty but I’m quite comfortable with that. 

Your advice/views are all welcomed! 

Thank you for your time. 

If your new projected rental incomes, plus other income sources pushes you into higher rate tax you should research s24  Finance Act 2015,  the effect of which is to add an additional tax burden on landlords by taxing non exsistent rental profits.

 The dire effect of s24 has driven heavily leverage 40%/45% tax paying BTL landlords out of the market and incentivised newcomers to create  BTL limited companies to shelter rents from s24. Problem with the company approach, is how to get the net rents out again without triggering high rates of dividend tax on top of corporation tax paid at company level.

kingstreet

Balance out the loan sizes so you benefit from the lowest rates - ie take a let to buy mortgage for less than 60% of the value of the current property and the same for the new residential purchase. This doesn't affect your tax credit against rental income as that is not reliant on what property the loans are secured on.

Hoenir

Without access to the full numbers impossible to say if it's a plan I would personally undertake. Leveraging with debt is a double edged sword. Enhances returns when thing go well. When they don't can inflict considerable financial damage. 

Whats your plan longer term for the BTL's.  The mortgages one day will need to be settled.