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Port mortgage across or get a new one? What should I do? moneymark

Posted: Fri Mar 10, 2017 5:40 am
by jetboy1123
Hello,



I'm planning to buy a second flat to live in whilst retaining my current house to rent out.



I have an offset mortgage on my current house worth £600,000 with the Yorkshire Building Society with a permission to let agreement whilst I rent it out and live in a separate rented flat.



My mortgage is currently at £159,000 and fully offset with savings and my monthly repayments are £1045. It's fixed for another 3 years at 3.19% with a redemption of £7000.00 if I end it early.



The flat I have had an offer accepted on is £335.000 and my plan was to put down a £100,000 - to £150,000 deposit on this from other savings. I would then take out a second residential mortgage, I understand this is ok as I have a permission to let agreement in place.



I am a self employed and pay myself a directors salary and take dividends. In terms of tax efficiency I understand that it might be better to port my current residential mortgage across to the new property and get a buy to let on my existing one?



Any advice and guidance on what would be best would be greatly appreciated.



Thanks in advance.









Kind regards



Mark

Posted: Fri Mar 10, 2017 9:11 pm
by fe
Will YBS permit a port where you are remortgaging the current property, not selling it? Many lenders won't.



Neither the type of mortgage you have, nor the asset on which it is secured has any bearing on the taxation of your rental income. You can currently use the interest on a mortgage upto 100% of the value of the property at the point it as first let as an allowable expense.

Posted: Sat Mar 11, 2017 11:01 am
by jetboy1123
Thanks, I was under the impression that the laws regarding taxation were changing and that the amount of the mortgage was no longer tax deductible from the rental income?

Posted: Sat Mar 11, 2017 5:04 pm
by fe
The laws are changing, but what I said has no bearing on this;-






Neither the type of mortgage you have, nor the asset on which it is secured has any bearing on the taxation of your rental income. You can currently use the interest on a mortgage upto 100% of the value of the property at the point it as first let as an allowable expense.


You will, of course, have to research how the changes will affect you.

Posted: Sun Mar 12, 2017 9:50 am
by jetboy1123
So keeping a residential mortgage on a permission to let agreement will be exactly the same taxation rate as a new buy to let mortgage?

Posted: Sun Mar 12, 2017 7:38 pm
by fe
Absolutely.

Posted: Mon Mar 13, 2017 8:55 am
by Lone_Sage360
You really need to speak to an accountant who deals in BTL accounts before you start looking for mortgages.

I would also speak to an independent mortgage broker ! Not one at the estate agents