Re-mortgaging was a *bad* move.
You need to get a BTL mortgage on the rental property ASAP. Otherwise you are not allowed to offset the interest payments against rental and will be taxed on the full value of the rental payments. Having a mortgage on the BTL property is like borrowing money to run a business. If you remortgage your home, you are deemed to be using your own capital rather than a loan.
Did you take any advice before starting down this road?
MBQ
Nobody seems to have mentioned the ethics of BTL - the fact is that it's a low form of capitalistic parasitism - hoping to earn money merely by owning something that other people need. Providing a service which nobody wants. Nobody loves a landlord, and BTL is a big factor in cranking up house prices. Be warned - the bubble may burst at any time and everybody will have a good laugh at the landlords in difficulties.
Different if you were building new - that could be a useful thing to do.
cheers Jacob
Well you have not said were in the country you are buying and if it's a house or a flat, both could be significant. i.e. flat Nottingham - Manchester Don't
most of the overall financial gain in buy to let comes from rising house prices. my own feeling is that house prices in most parts of the country are at a perilously high level for a first time investor, The rental income net yield from a property can be as low as 3% If you have a month or two without a tenant, And it would only take very small interest rate rise to put you in a position were you were losing money every month, that coupled with the real possibility of a short term fall in house prices could find you on the street without a house at all.
FWIW I have been "in property" so to speak for 40 years and have seen good times and bad times to buy and sell, I have almost been bankrupted and repossessed twice which tends to focus the mind. I am selling houses at present as the leases expire and have just bought a pub, much to the wife's dismay. To sum up, you are correct to be having very cold feet.
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Or to put it another way - hoping to get an income of the backs of people worse off than yourself who can't afford to buy houses. Should be against the law!
roll on the revolution - landlords first to the wall!
cheers Jacob
It can still make sense as a cash investment but not if you have to borrow the money. Wait for better times.
Dave
Which lots of people want. If you rent, you know more or less exactly what your outgoings are and you're free to move on at minimal cost if you need to move for any reason. And you only need a three or four figure deposit.
Ah. Like tescos does?
Or a chemist?
Thats must be Nu Laber en..
Wanker.
Well tahts must be why Nu Laber hasn't built a single councl house in years then.
After you then.
Out of the frying pan...? :)
because they can't afford to buy - which is made worse by BTL boosting prices. And many can't afford a 3 or4 figure deposite - and of those that can many don't see it again. I've had 3 kids at Uni at various times and they have all been ripped off by landlords not returning deposites.
cheers Jacob
A chap I know who has been doing buy to let for many years is currently selling his properties off, if that is any help. Apparently, the places to buy to let at the moment are Barcelona and Paris, but I've not tried it myself.
Colin Bignell
Well the frying pan contains on the menu tonight pan fried sea bass with spinach and a red wine sauce caramelised plum tart with vanilla ice cream nice pint of real ale it's a good exchange for 3 sets of poxy tenants from were im sitting.
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Sounds delicious!
I can see why it would be - good luck then!
Publican..? :)
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No...my brother-in-law is just getting out...big pub on a working-class estate. There just isn't the business anymore and the smoking ban is the final straw for proifts. CAMRA reckoned in 2005 that 26 pubs per month were closing, but if you have yummy food like that on the menu, you are in a much better position!
Off you trot Trotsky, looking for the next state handout.
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Ah This is a country village freehold freehouse, the restaurant is the money maker. Along with a busy B+B and wedding reception facilities, its next to a church :)
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.. and with zero input of effort, which is not free.
Primary residence as collateral?
I hate to have to say you're wrong, but you are! The test for whether the mortgage interest is a deductible expense is what the PURPOSE of the loan was (to buy a rental property), not what the loan is secured over (or indeed whether it's secured at all) or whether it's marketed as a BTL mortgage. If in doubt check the Inland Revenue document on this.
Anyway, my understanding of the original post what that he has only raised the deposit through the remortgage, the bulk of the money will be raised through a loan secured over the place to be let out. All the interest on all the money he borrows to buy the property (via both loans) is deductible (as are loan interest payments for any business).
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