Over paying holiday let mortgage tax query
Discussion
I wonder if anyone can give some useful advice over this situation that I've been asked to comment on.
A colleague has a furnished holiday let which he financed by a further mortgage advance on their primary residence. I can't remember the exact figures but the interest rates are roughly 2% on the main residence and 4% on the further advance.
He's now come into a lump sum which would allow him to pay off either the 2% loan or the 4% loan.
The interest on the holiday let loan offsets tax on the income from it so is there any point in paying this off? Should he pay off the primary loan but that is at lower rate?
My thinking is that he should pay off higher rate loan and that whatever is left owing, the interest should be offset against the tax on the holiday let income as the loan only exists for the purchase of the holiday let.
A colleague has a furnished holiday let which he financed by a further mortgage advance on their primary residence. I can't remember the exact figures but the interest rates are roughly 2% on the main residence and 4% on the further advance.
He's now come into a lump sum which would allow him to pay off either the 2% loan or the 4% loan.
The interest on the holiday let loan offsets tax on the income from it so is there any point in paying this off? Should he pay off the primary loan but that is at lower rate?
My thinking is that he should pay off higher rate loan and that whatever is left owing, the interest should be offset against the tax on the holiday let income as the loan only exists for the purchase of the holiday let.
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