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Do I overpay and pay more in tax?
frankthebeef
Posts: 2 Newbie
Hi Everyone!
I’m trying to decide whether to change the term on my 50k mortgage ( on a property I rent out) from a 13yr term to 25yrs or even interest only in order to pay the money I save off my primary residence and keep the amount of interest on the rental property high to claim tax relief on. Over 13 yrs the payments would be £655 or £315 over 25 yrs or £240 if interest only. I receive £595 pcm in rent. I think this is a no brainer! However, I like the idea of paying off at least a little of the capital or am I just being stupid? Thanks in advance Frank.
I’m trying to decide whether to change the term on my 50k mortgage ( on a property I rent out) from a 13yr term to 25yrs or even interest only in order to pay the money I save off my primary residence and keep the amount of interest on the rental property high to claim tax relief on. Over 13 yrs the payments would be £655 or £315 over 25 yrs or £240 if interest only. I receive £595 pcm in rent. I think this is a no brainer! However, I like the idea of paying off at least a little of the capital or am I just being stupid? Thanks in advance Frank.
0
Comments
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You're absolutely right. You are being stupid.
Change the BTL to interest only and borrow as much as possible for tax purposes. Use this capital to reduce your residential mortgage and if you can overpay, do so on the residential mortgage. After that (or before if the rates are good), max out your ISAs before paying anything off the BTL mortgage.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0
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