Low LTV costs?

by Readers Question

7:31 AM, 5th February 2020
About 8 months ago

Low LTV costs?

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Low LTV costs?

I have two BTL interest only mortgage, which are coming to an end and I need to find another provider.

Unfortunately, the LTV has changed considerably as the flats have reduced in value and in order to find another decent mortgage rate I will have to reduce the mortgage amount by £65000 from my savings to get the LTV to 75%.

My question is regarding the tax implications of the £65,000, I am assuming that this will be deducted from my capital gains calculations when I sell the flats, but can I also claim any tax relief?

Many thanks



Neil Patterson

7:34 AM, 5th February 2020
About 8 months ago

Hi John,

CGT is calculated by the sale price minus purchase price minus any capital investment. Therefore the reduction in value would be taken into account.

However there is no tax relief on reducing your mortgage as it does not affect your net financial position.


9:00 AM, 5th February 2020
About 8 months ago

Hi John, that appears to be quite a huge depreciation. Do you mind sharing the area of the property? I am just thinking the yield must be also very low and impacting on monthly cashflow.

John Bailey

8:53 AM, 8th February 2020
About 8 months ago

Reply to the comment left by Jun at 05/02/2020 - 09:00
Yes the two flats are in Basingstoke, built by TA Fisher around 15 years ago, they were very expensive to buy at £325 000, but in a very nice well built small development around 10 minutes walk from the town. Since then however there’s been a huge increase in the development Of flats in and around the town and the values of my two properties have dropped to around £300,000. But the yields have always been pretty good, because of the high quality I usually rent to senior managers from local businesses in the area, Although after saying that the yields have dropped this last couple of years, More and more younger people looking to rent closer to the town so my tenants tend to be more of the mature type.


19:30 PM, 8th February 2020
About 8 months ago

See if the original mortgage company will extend the term.

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