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  • FIRST POST
    • Keshav
    • By Keshav 10th Oct 16, 3:34 PM
    • 2Posts
    • 0Thanks
    Keshav
    Pay off buy to let mortgage?
    • #1
    • 10th Oct 16, 3:34 PM
    Pay off buy to let mortgage? 10th Oct 16 at 3:34 PM
    Hi. I have a btl property and wondered if I should make over payments to try and reduce payments in the future. Thing is I don't know if I should because it's a repayment mortgage and when I pay tax on the 'income' the interest I pay is deducted so I don't know if I should bother making more repayments.
    Bank accpunts have poor interest rates so not like I'm gaining much from saving. But I don't want to pay more tax by paying off as much of the mortgage as possible.
    Any suggestions would be greatly appreciated.
    Thanks
Page 1
    • saajan_12
    • By saajan_12 11th Oct 16, 9:09 AM
    • 1,219 Posts
    • 843 Thanks
    saajan_12
    • #2
    • 11th Oct 16, 9:09 AM
    • #2
    • 11th Oct 16, 9:09 AM
    If you leave a bigger outstanding on the mortgage, you 'save' 20/40% of the interest by not paying tax to the gvt, but you're still paying the remaining interest to the bank! Unless you're opposed to paying the gvt and would rather pay more to the bank to avoid the greedy tax man getting his mitts on your profit.

    The basic equation is: If Savings interest rate < 0.8*Mortgage interest rate then PAY OFF

    Somehow I think that will always be the case. Ofcourse make sure you have enough funds easily accessible for repairs, voids, insurance, etc
    • Keshav
    • By Keshav 13th Oct 16, 8:46 AM
    • 2 Posts
    • 0 Thanks
    Keshav
    • #3
    • 13th Oct 16, 8:46 AM
    Thanks
    • #3
    • 13th Oct 16, 8:46 AM
    Thanks for the reply. Much appreciated
    • economic
    • By economic 13th Oct 16, 8:55 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    • #4
    • 13th Oct 16, 8:55 AM
    • #4
    • 13th Oct 16, 8:55 AM
    nah dont pay off. even if savings is more then mortgage interest you dont wnt money tied up in an illiquid asset....
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