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View Full Version : First time BTL landlord may be making a big mistake!



virginlandlord
07-10-2011, 18:20 PM
(previously posted in the wrong area)

I am a first time landlord and am about to complete on a flat to let out.

I am financing this from inheritance so is a cash buy. £84k.

But I have a mortgage on my home for approx £80k owing at 2.5%. I am extending the loan by £30k to do some home improvements again at 2.5%. Which will leave me with a balance owing of £105k. (repayment tracker)

I have gone this way thinking been a cash buyer will get me the best deal on the flat. (Which it has). Also a 2.5% mortgage is better than at 4.5% BTL mortgage.

Where I think I have gone wrong is that when I come to do my tax return (which will be new to me as I am an employee on the 40% income tax bracket). I will not be able to claim any interest payments against my costs.

I am putting the flat in my wife name (20% tax), which may be the only thing I am doing correctly.

The question is; can I claim a percentage of my mortgage interest from my home against the flats costs? Or would I have to get a BTL mortgage on the flat and pay off a large chuck of my home mortgage? I do not want to do this, as the banks are the main winner?

Thanks in advance for any help, once you have stopped laughing at my naivety, any help appreciated.

Snorkerz
07-10-2011, 18:27 PM
Unfortunately, you can not claim the interest on your residence.

I understand that you may feel aggrieved at the banks charging you more % for a BL mortgage, but it is a much bigger risk for them. The tax you save should offset the increased interest.

virginlandlord
07-10-2011, 18:43 PM
Thanks Snorkerz.

As my morgage extension has not cost me any charges, I can aply for a BTL and if it take some time I will have the cash to push the purchase through and then go for the best BTL deal I can find. Though this will incure me costs, which I know from my day job is to minimise always.

The choice then will be how much I gear myself.

Thanks virginlandlord

Gordon999
08-10-2011, 03:42 AM
1. The best offers on BTL mortgages in the market can be found listed on www.moneysupermarket.co.uk

2 . Most lenders are looking at BTL borrowers taking 70% loans as max.