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Hi, am struggling to find any relevant posts but am looking into the benefit or otherwise of having an interest only or repayment BTL mortgage. Clearly you can only claim a declining proportion of the interest which ever you choose under S24 but has anyone got a firm view if there is an advantage either way?
I have a young friend (already a higher rate tax payer) who has the chance to move for work and rent her flat out for a couple of years. She needs to remortgage and is trying to decide if its better to carry on with a repayment BTL product or an IO one. Has anyone else looked into this?
interest only as its easy to check the certs of interest, payments and balances...building societies do make errors and have discovered several over the years!
also io is better for cashflow.
given the same rate of interest, a capital repayment the interest element is less than interest only.
just a case if you can do without the capital element.
We always go for repayment as it slowly increases our ownership percentage as a prudent measure. Yes a bit more tax but an increased equity for further borrowings. It would not need much of a price slump to make highly geared borrowings vulnerable. Post Corbyn?
I think you make a very valid point I wish I had gone CR 15 years ago
I have been effected by s24 my tax bill will treble in 3 years
if I had been on CR my tax would be far less
I recommend anyone today to go CR because you never know when the government will change the rules
less leverage is best
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Thanks all. An interesting range of views as usual!
IO to keep control and keep your options open
CR only if you dont trust yourself to use the savings wisely
I invested my savings which produces more income and more CG
I can use this extra income to pay S24 if required or buy more
No point in my view busting a gut to borrow 75% LTV only to start paying it down to 74% the next day
Might as well have only taken out 74% LTV borrowings in the first place
Jonathan Clarke. http://www.buytoletmk.com
Interest Only to keep control as Jonathan said.
Then work out what you would be paying on capital repayment and put that element into a savings account.
Thanks both. Does the fact that an IO mortgage mean you will be paying a higher rate of tax when S24 is in full effect? I guess it does as the figure is higher than a CR but gives you the opportunity to put the spare cash to better use than increased equity which is locked in.
Whether it's IO or CR will make no difference to the amount of tax you pay.
Agree after S24 is in full effect, but between now and then?