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Second home tax, mortgage etc options

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Comments

  • CDB199
    CDB199 Posts: 67 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Hadn't considered his as an option before now so many thanks for posting. Food for thought indeed and great option to maximise my tax efficiency.
  • kingstreet
    kingstreet Posts: 39,440 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    CDB199 wrote: »
    Recently paid off mortgage on home and thinking of purchasing second property and using rental income on first place to pay towards new mortgage
    If the property is unencumbered, there are lenders which take the rental income into account for residential mortgage affordability.
    I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    1,000 Posts Combo Breaker
    kingstreet wrote: »
    If the property is unencumbered, there are lenders which take the rental income into account for residential mortgage affordability.
    interesting, in that case some number crunching will reveal which is "cheaper" (and some faith in the future direction of taxation policy!)

    - unencumbered let property, (large) residential mortgage at residential mortgage interest rates. Rental income less full tax taken into account in overall income level. No tax relief on mortgage

    - mortgaged let property at BTL interest rates, + (small) residential mortgage at residential mortgage rates. Rental income not taken into account, but profit on rent is "tax efficient" in that it is after allowing for mortgage interest
  • Freecall
    Freecall Posts: 1,337 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    CDB199 wrote: »
    I may be able to call this new property my main residence

    I don't see why not.

    Although 'My main residence' is an unusual name for a house it's a lot more imaginative than 'Dunroamin'.

    ;)
  • kingstreet
    kingstreet Posts: 39,440 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    00ec25 wrote: »
    interesting, in that case some number crunching will reveal which is "cheaper" (and some faith in the future direction of taxation policy!)

    - unencumbered let property, (large) residential mortgage at residential mortgage interest rates. Rental income less full tax taken into account in overall income level. No tax relief on mortgage

    - mortgaged let property at BTL interest rates, + (small) residential mortgage at residential mortgage rates. Rental income not taken into account, but profit on rent is "tax efficient" in that it is after allowing for mortgage interest
    Yup. Needs accountant and mortgage broker assistance to piece this together. Certainly outside the scope of this place with the amount of information required to do it properly.
    I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.
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