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Need to raise finance-how much BTL vs residential...
clumsycloggs0305
Posts: 43 Forumite
Calling all experts out there, we need advice. We will be letting out our home and moving to another house. We need to raise 250k in all (PS - we own our home outright), what is the best way to do this? Should I borrow maximum on a BTL, and remainder on residential? Our incomes multiples are ok. I know a BTL is more expensive but will maximum borrowing help from a tax perspective? Should BTL be interest only? Also, what is a "let to Buy" and which lenders provide this? Is it supposed to be cheaper that a BTL? Your comments most welcome, again we are just stepping on the BTL ladder and haven't much experience in this area, thanks
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still struggling, can anyone give some guidance...thanks0
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It depends, Great answer i know.
You are right, if the Buy to Let (BTL) is taken to the maximum it will produce less profit and therefore less income tax but they are slightly more expensive that a main mortage so you may argue that the difference between to two would cover the tax implications.
Do you want to do the mortgaeg Interet only? Clearly this will mean that you have to sell the house, unless you've got other plans, to clear the mortgage debt off. you "could" take the mortgage on indefinitly but if you are planning it to be your pension income it may be worth doing it on repayment too. The income tax will only take interest payments I think but best check that with an expert.
A let to buy, is a buy to let, in all but name. The lenders call it that as they allow you to LET your own home in order to BUY another to live in yourself.0 -
let to buy is where to rent a place with aview to buying, not i think what you are looking for.
i have just obtained a btl mortgae for less than 5% so i don't think rate is too much of an issue. i used to think that you had to borrow the money againat the btl property to get the tax advantages but i have been told by an expert that this is not true, whatever money you borrow for the btl, on either property is tax deductable(well the interest payments anyway) their is a new tax expert posting on https://www.landlord-forum.co.uk who can give you the best advice on what to do!0 -
Thanks so far, a mortgage broker ha also found me a BTL mortgage at 5% and the residential at 4.79% so there is not much of a difference... I will try https://www.landlord-forum.co.uk and see what advice I get aas well, thanks again0
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no probs, my broker just rang to say he has found a 4.79 btl 85%ltv with bm solutions (birmingham midshires), tracker for 2 years, with a £595 arr fee, they do a fixed rate also but it has a fee of £2,400!0
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UK_Landlord wrote:no probs, my broker just rang to say he has found a 4.79 btl 85%ltv with bm solutions (birmingham midshires), tracker for 2 years, with a £595 arr fee, they do a fixed rate also but it has a fee of £2,400!
FYI- The reason for very high upfront fee BTL deals tends to be to accomadate a lower pay rate which then in turn allows a higher loan to value as the mortgage will often be capped by the rental assessment vs pay rate formula.
Hope this makes sense? :-)
Ok english version-
Buy to let mortgages are underwritten on the basis that the rent covers the mortgage payment- normally plus a percentage, typically 125-130%.
So the lower the mortgage payment, obviously affected by the rate of interest charged, the more likely the mortgage will be acceptable to the lender due to the assesment of acheivable rent from the valuer. Nevertheless, the lender still want's to make a profit, so therefore charges a high application fee (nothing to do with the underwriting process).I am a fee charging WoM Mortgage broker.I now no longer give information and opinion within the Mortgage boards, because a number of posters who, having approached me professionally, agreed my fee-which has been been made very clear at the outset, taken my advice (normally cancelling a [home visit] meeting at short notice) have then approached one of the fee-free brokers on here to arrange the very same deal I have advised.Whilst I totally concur with the ethos of "money saving"- abusing the goodwill of a professional who provides a quality service is taking it too far! :mad:0 -
Dave
you need to put that in laymans terms (no offence anyone)- I had to read it twice but it could just be the vino.
LisaI am a Mortgage Adviser
You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Post edited and translated from norweigan to english- I hope!
I am a fee charging WoM Mortgage broker.I now no longer give information and opinion within the Mortgage boards, because a number of posters who, having approached me professionally, agreed my fee-which has been been made very clear at the outset, taken my advice (normally cancelling a [home visit] meeting at short notice) have then approached one of the fee-free brokers on here to arrange the very same deal I have advised.Whilst I totally concur with the ethos of "money saving"- abusing the goodwill of a professional who provides a quality service is taking it too far! :mad:0 -
clumsycloggs0305 wrote:Thanks so far, a mortgage broker ha also found me a BTL mortgage at 5% and the residential at 4.79% so there is not much of a difference... I will try https://www.landlord-forum.co.uk and see what advice I get aas well, thanks again
Speak to another broker. There are better rates than this out there. I get better BTL rates than the residential figures you have quoted.
Remember, though, if you go for a residential mortgage on the property to be let out, the lender and insurers will need to know its rented. Some lenders will be happy for you to do this, but may increase their rates.
Research current rental figures for the property. The rent received must cover repayments by 125-130%. This is why it is probably better to go for interest only BTL. With most mortgages, you can overpay anyway, so not really an issue.0 -
i did see better rates out their but most of them were with extended tie ins, one rate was about 1.6% for a year, but you were tied in for 8 years! :eek:
if you know of better deals let us know!0
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