Maximising Cheap Mortgage Funds

Maximising Cheap Mortgage Funds

9:29 AM, 28th January 2014, About 9 years ago 14

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Hello All,

Just a quick one.

I’m keen to get some opinions on the way forward.

I currently have one buy to let, Value £120,000 , Mort £100,000 and I would like another one /two. The thing is, I have a flexible openplan residential mortgage (£70,000 outstanding) with access to around £50,000 of borrowing at very low interest (1.35%).

I am considering using this for a deposit on one or two buy to lets and I am interested in other landlords opinions on this method. Maximising Cheap Mortgage Funds

Thanks

DB



Comments

Jerry Jones

17:27 PM, 29th January 2014, About 9 years ago

And now with an example:
Bought a cheap Northern terrace for £30k in 2003 with an 85% LTV mortgage from those nice people at TMC. By 2005 its valuation had risen to £75k so remortgaged to 85% of that, i.e. £63750, which as £33750 above what I had paid. I didn't count the interest on that £33750 against my income for tax. In 2006 I had added several more, some of which still had mortgages well below their purchase price, especially once I added what had been my own home to the portfolio, with a much lower LTV. If you aggregate the original purchase prices together they come to, say, £500k, with total mortgages of £450k. This means that HMRC view the portfolio as still having borrowings well below purchase price, and all interest can now be offset against rental income. That is not taking into account the fact that some of the borrowing was used to finance deposits, which will need to be taken into account once borrowing increases in the future. Does that make it any clearer?

Mark Alexander - Founder of Property118 View Profile

17:29 PM, 29th January 2014, About 9 years ago

Reply to the comment left by "Jerry Jones" at "29/01/2014 - 17:05":

Now that makes a lot more sense to me Jerry, thanks for the clarification and I totally concur. That's also the way I do it.

If you are married there is also a way to increase the base price for tax relief on interest purposes but it doesn't work for CGT unfortunately, see >>> http://www.property118.com/landlord-tax/
.

Jerry Jones

17:43 PM, 29th January 2014, About 9 years ago

Reply to the comment left by "Mark Alexander" at "29/01/2014 - 17:29":

I might find getting married too high a price to pay. Unless your lovely new bride has a sister with poor eyesight.

Mark Alexander - Founder of Property118 View Profile

17:53 PM, 29th January 2014, About 9 years ago

Reply to the comment left by "Jerry Jones" at "29/01/2014 - 17:43":

HaHaHa - LOL 🙂
.

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