The buy to let mortgage dilemma.
April the 6th this year sees the introduction of the new tax rules on buy to let mortgages for landlords. This may present some of you with a dilemma – should you give up on residential lets and buy shops instead or should you carry on, even if you risk making a loss as a result of higher taxes?
Many landlords are considering alternatives with some choosing to transfer their mortgage debt away from their property portfolios in favour of mortgaging their own homes instead.
But, can this work? There are four questions to address before opting for this as a solution.
Firstly, is it possible to remortgage the buy to let properties first?
Switching to a better deal may significantly impact the profitability of your portfolio.
Secondly, how expensive is a residential mortgage?
Buy to let mortgages are typically more expensive than a residential one, often by a difference of 2%. As rates currently continue to be so low, an expensive buy to let debt could be replaced by a cheaper residential one.
Thirdly, would you have any difficulty in demonstrating you can afford the repayments on a residential mortgage?
And finally, would offsetting the debt against your buy to let portfolio be an option your lender is happy with?
Seeking professional advice, before you do anything, is paramount. Our expert advisers at Deal Direct can help you to answer all of these questions, so you can be sure of avoiding making a costly error.
Please be aware that whilst we are regulated to offer independent mortgage advice by the FCA, we are not regulated to offer independent financial advice. To discuss whether property is suitable as an investment, please contact an independent financial adviser for guidance.
Please note:
Buy to let mortgage applications from:
- applicants whose intention is to benefit from house price growth
- applicants whose intention is to benefit from rental income
- applicants who are letting to buy
will be treated as normal buy to let and not as a consumer buy to let. In addition, their subsequent remortgage applications will also be treated in the same manner.
For mortgage advice you can trust, call 0800 048 8828.
