BTL repayments or pay down residential?
Discussion
Ok so cousin is in a dilema...
she lets a property for £850pm, mortgage (interest only) costs her £250.
Should she...
1. Overpay her BTL mortgage and get it paid off.
Or
2. Use these extra funds to pay down her own residential property?
If she came to sell the BTL would her CGT be calculated on the difference between the selling price and the original purchase price? She had lived in it so a taper relief would apply.
Keeps some aside for the yearly tax bill!
Any guidance welcome!
she lets a property for £850pm, mortgage (interest only) costs her £250.
Should she...
1. Overpay her BTL mortgage and get it paid off.
Or
2. Use these extra funds to pay down her own residential property?
If she came to sell the BTL would her CGT be calculated on the difference between the selling price and the original purchase price? She had lived in it so a taper relief would apply.
Keeps some aside for the yearly tax bill!
Any guidance welcome!
Which one is most at risk in the event of a change of govt or a decline in values? Or closest to achieving lower costs with a better LTV?
Technically the scenario comes about due to the io mortgage on the BTL giving the flexibility over what to do with the repayment element of that property. But I think you need to know a lot more details regarding the two loans and personal circumstances before you can really know whether diverting those funds away from where they ought to be going is a better or worse long term plan. It may be that paying neither off and building a cash war chest is the more prudent course of action.
Technically the scenario comes about due to the io mortgage on the BTL giving the flexibility over what to do with the repayment element of that property. But I think you need to know a lot more details regarding the two loans and personal circumstances before you can really know whether diverting those funds away from where they ought to be going is a better or worse long term plan. It may be that paying neither off and building a cash war chest is the more prudent course of action.
DonkeyApple said:
But I think you need to know a lot more details regarding the two loans and personal circumstances before you can really know whether diverting those funds away from where they ought to be going is a better or worse long term plan.
Agreed, more details about interest being paid on residential mortgage, outstanding balance etc to ensure you don't end up shooting yourself in the foot with ERC's!Gassing Station | Finance | Top of Page | What's New | My Stuff