current mortage - BTL - question

[66Elan]

More difficult to offset the mortgage payments against the rental income if the mortgage is not secured on the let property

[Sarnie]

superlightr said:

Can we just borrow more on the exisiting mortage secured on our family home or will the mortgage company want to know what the extra money is for and then look to charge a higher loan rate

Edited by superlightr on Tuesday 18th October 13:54

Yes you can......and naturally they will want to know where their money is going to....they won't charge a higher interest rate, they just will either do it or they won't.

[Jockman]

66Elan said:

More difficult to offset the mortgage payments against the rental income if the mortgage is not secured on the let property

Is it?

[Wings]

This article might be of some interest to you.

http://www.telegraph.co.uk/tax/inheritance/will-we...

Being located in the South West, have you given any thoughts to the tax advantages of purchasing a Holiday Let, or even purchasing a larger residential property, and renting out a room, floor of the property under the HMG’s Rent a Room Scheme.

[superlightr]

Wings said:

This article might be of some interest to you.

http://www.telegraph.co.uk/tax/inheritance/will-we...

Being located in the South West, have you given any thoughts to the tax advantages of purchasing a Holiday Let, or even purchasing a larger residential property, and renting out a room, floor of the property under the HMG’s Rent a Room Scheme.

Thank you - good article.

renting a room out/floor out is not an option direction we would go down. A holiday let is an option (although we are based in SE)

[superlightr]

Sarnie said:

superlightr said:

Can we just borrow more on the exisiting mortage secured on our family home or will the mortgage company want to know what the extra money is for and then look to charge a higher loan rate

Edited by superlightr on Tuesday 18th October 13:54

Yes you can......and naturally they will want to know where their money is going to....they won't charge a higher interest rate, they just will either do it or they won't.

Yes no issues with telling them but wishing to have it secured on our main home as there will be higher equity which would I hope = lower risk and a lower mortgage rate.

Thank you.

[98elise]

Jockman said:

66Elan said:

More difficult to offset the mortgage payments against the rental income if the mortgage is not secured on the let property

Is it?

No its not, its the purpose of the loan not what its secured against that counts. If you're taking out a loan to buy a BTL it could be secured against anything, or even unsecured. It can still be offset.

Just make sure you have a proper paper trail clearly showing that's what the loan was used for.

That how I purchased my first BTL and my accountant was happy with the arrangement.

[Jockman]

98elise said:

Jockman said:

66Elan said:

More difficult to offset the mortgage payments against the rental income if the mortgage is not secured on the let property

Is it?

No its not, its the purpose of the loan not what its secured against that counts. If you're taking out a loan to buy a BTL it could be secured against anything, or even unsecured. It can still be offset.

Just make sure you have a proper paper trail clearly showing that's what the loan was used for.

That how I purchased my first BTL and my accountant was happy with the arrangement.

[Ozzie Osmond]

superlightr said:

Looking to get a property to rent out.

Have you thought through why do you consider borrowing money to invest is a good idea?

Would you borrow money to invest in the stock market? If not, why not?

Have you maxed out your pensions and ISAs? They get generous tax relief. BTL doesn't.

[13m]

Ozzie Osmond said:

superlightr said:

Looking to get a property to rent out.

Have you thought through why do you consider borrowing money to invest is a good idea?

Would you borrow money to invest in the stock market? If not, why not?

Have you maxed out your pensions and ISAs? They get generous tax relief. BTL doesn't.

But then BTL is a lot more profitable in the first place, or can be at least. We are imminently offloading some housing stock that will yield 10% gross. In a company it will be taxed at 20%.

Is there much else out there that will offer the same or better?

[NickCQ]

13m said:

Is there much else out there that will offer the same or better?

Risk / reward...

[Jockman]

13m said:

But then BTL is a lot more profitable in the first place, or can be at least. We are imminently offloading some housing stock that will yield 10% gross. In a company it will be taxed at 20%.

Is there much else out there that will offer the same or better?

How do you then extract the money from the company?

[13m]

Jockman said:

13m said:

But then BTL is a lot more profitable in the first place, or can be at least. We are imminently offloading some housing stock that will yield 10% gross. In a company it will be taxed at 20%.

Is there much else out there that will offer the same or better?

How do you then extract the money from the company?

It depends a great deal on your personal circumstances.

[Zoon]

13m said:

But then BTL is a lot more profitable in the first place, or can be at least.

Until you factor in management charges, repairs and maintenance.
Chuck money in a pension and you get 20% minimum.

[Jockman]

13m said:

Jockman said:

13m said:

But then BTL is a lot more profitable in the first place, or can be at least. We are imminently offloading some housing stock that will yield 10% gross. In a company it will be taxed at 20%.

Is there much else out there that will offer the same or better?

How do you then extract the money from the company?

It depends a great deal on your personal circumstances.

Indeed. Generally there will be some form of tax liability?

[13m]

Zoon said:

13m said:

But then BTL is a lot more profitable in the first place, or can be at least.

Until you factor in management charges, repairs and maintenance.
Chuck money in a pension and you get 20% minimum.

Depending upon what stock you're holding repairs and maintenance aren't massive.

20% return on pensions you say?

[13m]

Jockman said:

13m said:

Jockman said:

13m said:

But then BTL is a lot more profitable in the first place, or can be at least. We are imminently offloading some housing stock that will yield 10% gross. In a company it will be taxed at 20%.

Is there much else out there that will offer the same or better?

How do you then extract the money from the company?

It depends a great deal on your personal circumstances.

Indeed. Generally there will be some form of tax liability?

There is, but it need not be huge. Emptying money out a pension is also a taxable event.

[Jockman]

13m said:

There is, but it need not be huge. Emptying money out a pension is also a taxable event.

It can be, but again it need not be huge

[Ozzie Osmond]

Stock market - up 15% since April this year, plus dividend income of around 3.5% p.a. Typical total return around >8% p.a. hassle free.

Pension - 40% tax relief going in (depending on income), cumulates completely tax free, 25% comes out completely tax free, perhaps only 20% tax on the rest.

ISA - no Income Tax, no Capital Gains Tax.

If you have good stock market returns inside a tax-relieved pension or ISA it can be very profitable indeed.

[13m]

Ozzie Osmond said:

Stock market - up 15% since April this year, plus dividend income of around 3.5% p.a. Typical total return around >8% p.a. hassle free.

Pension - 40% tax relief going in (depending on income), cumulates completely tax free, 25% comes out completely tax free, perhaps only 20% tax on the rest.

ISA - no Income Tax, no Capital Gains Tax.

If you have good stock market returns inside a tax-relieved pension or ISA it can be very profitable indeed.

I have two pensions and property investments. Guess which of the three has done best over the past 10 years.