Residential Mortgage, BTL and Cash - guidance needed

[treetops]

For a friend...a question for those that might know and hope there might be a sensible answer out there as to what to do.

What would be best to do in a situation like this?

BTL

Value - £190k
Rental monthly income - £850
Mortgage - £200 @ 2% (int only)
Outstanding mortgage £99k


Residential

Value - £400k
Mortgage - £1,100 @1.89%
Outstanding mortgage £130k


Cash

Enough to clear both mortgages above.


Question:

- Would it make sense to clear the residential and then ebb away at that BTL?
- Or clear the BTL and use that income to pay down the Residential?
- Clear all of one and half the other?
- If the BTL mortgage was cleared and then subsequently sold - capital gains tax would only apply to the gain above the original purchase price?

Any other ideas or guidance I could pass would be much appreciated.

Thanks very much in advance.

[treetops]

Anyone able to advise? Keen to try and get an answer for a friend. Thanks.

[mikeh501]

or buy another BTL with the cash??

[anonymous-user]

no one would offer definitive advice on such limited information - it would need to be in context of the broader financial situation and aims of your friend

but, among many things, if reducing the overall mortgage debt is an objective, (s)he will want to consider the relief for finance costs for residential property businesses these days: where that used to fully deductible from rental income when calculating taxable profits, that is no longer the case

[chrishumes1978]

Keen to follow this to learn from the experts...but my thinking now would be why not pay off both mortgages, then use the spare monthly money and rental income to save into a ISA again....

[anonymous-user]

treetops said:

For a friend...a question for those that might know and hope there might be a sensible answer out there as to what to do.

What would be best to do in a situation like this?

BTL

Value - £190k
Rental monthly income - £850
Mortgage - £200 @ 2% (int only)
Outstanding mortgage £99k


Residential

Value - £400k
Mortgage - £1,100 @1.89%
Outstanding mortgage £130k


Cash

Enough to clear both mortgages above.


Question:

- Would it make sense to clear the residential and then ebb away at that BTL?
- Or clear the BTL and use that income to pay down the Residential?
- Clear all of one and half the other?
- If the BTL mortgage was cleared and then subsequently sold - capital gains tax would only apply to the gain above the original purchase price?

Any other ideas or guidance I could pass would be much appreciated.

Thanks very much in advance.

Why don’t you say to your friend ‘I don’t know’? I’m sure they have the wherewithal to ask strangers too if they so desire. By doing that at least they’d be aware the advice could be coming from a naked pervert in a council flat though rather than assuming the friend has insight.