Re-mortgage

[asjwhite]

I bought my flat for £90,000 10 years ago and lived in it for a number of years. When I moved out I converted the mortgage to a buy-to-let mortgage - the mortgage being ~£85000 - and let the property. The property is now worth in the region of £200,000. Can I increase my mortgage, to say, £150000? If this is allowed how can the money raised be used? Could this be used to buy an overseas property or to fund an extension/pay off the mortgage on my PPR?

Thanks in advance.

[Tax Accountant]

I bought my flat for £90,000 10 years ago and lived in it for a number of years. When I moved out I converted the mortgage to a buy-to-let mortgage - the mortgage being ~£85000 - and let the property. The property is now worth in the region of £200,000. Can I increase my mortgage, to say, £150000? If this is allowed how can the money raised be used? Could this be used to buy an overseas property or to fund an extension/pay off the mortgage on my PPR?

Thanks in advance.

You can remortgage upto the value of the property at the time when it was let. The total interest will be deductible as an allowable expense against your rental income from the property.

The money raised from re-mortgaging could be used for whatever takes your fancy. It is your money and, for tax relief purposes, it is irrelevant what it is used for.

If you wished to reinvest the money in buying other investment properties, the interest will be eligible as an expenses of your lettings business regardless of the amount raised by you, ie, you could borrow upto its total value now and you are not restricted to borrowing only upto the value when it was first let.

I hope this is clear and has been helpful.

Ramnik

[graham]

HI Ramnik
My buy to lets were let out from day 1.
What you're saying is that even if the properties have appreciated 50% I can not remorgage above the price of the properties at the time they were let.
I have a BtoL house that has increased in value from 85k to 125k.
I wondered whether I could borrow 30k before selling to avoid CGT.
I guess this isnt possible then?
Thanks in advance.
Graham

[Tax Accountant]

HI Ramnik
My buy to lets were let out from day 1.
What you're saying is that even if the properties have appreciated 50% I can not remorgage above the price of the properties at the time they were let.
I have a BtoL house that has increased in value from 85k to 125k.
I wondered whether I could borrow 30k before selling to avoid CGT.
I guess this isnt possible then?
Thanks in advance.
Graham

You can remortgage but you will not be able to claim the additional interest as an expense of your lettings business.

Wishful thinking, but no, you cannot borrow £30,000 to avoid CGT.

Ramnik