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Useful Buy2Let Information & Tips....
…Sharing and Transferring Equity to Reduce Income Tax Burden - You want to buy a property and let it out. Lets say your house is currently worth £100k and you have a £50k mortgage (interest only type) at 5%. In other words you have 50K of equity. This mortgage currently costs you £2.5k per year in mortgage repayments (£50k @ 5% = £2.5k). Using a Flexible mortgage, you increase your mortgage by £50k (from £50k to £100k) and use this extra £50k as the mortgage deposit for a new property that you will move into. This property is costing you £200k – you place the £50k as your deposit and you borrow the other £150k using a conventional residential mortgage (again at 5% interest). The mortgage repayments on your old house (now your new rental property) will now rise from £2.5k per year to £5k per year because the mortgage is now £100k. As this is an interest only type mortgage – ALL of the mortgage interest is offsetable against rental income for tax purposes. At the same time by allocating more debt to your rental property (as opposed to your shiny new residential property worth £200k), you have reduced the mortgage repayments on your new residential property. This is because you placed a very large deposit of £50k down. In effect, you reduced the mortgage from 200K to 150K – reducing annual mortgage interest payments from £10k per year to £7.5k per year (a saving of £2.5k per year). Remember there are no tax advantages from paying a residential mortgage, as it is obviously not any form of commercial business. The perceived downside to this is that you have instantly increased the capital value of the mortgage of your old property (now rental property) by £50k. However, the ‘opportunity cost of money’ of reducing the total interest payable on your new residential mortgage will outweigh increasing the capital on your old property (now rental) – because proportionally more interest is offsetable against tax over the long term. Hence your yield will be higher in the long term when you consider your combined debt as one.
DISCLAIMER - we do not offer financial advice - all words are 'information only'
Mortgage Brokers in Surrey....
ASC Surrey Finance For Business:- Chancery House, Weybridge, KT13 9XZ BKG Financial Services Limited:- 20 Church Hill, Purley, CR8 3QN Burghside Mortgage Services Limited:- Burghside, Banstead, SM7 1BB Business Finance and in House Training:- 13a Ross Parade, Wallington, SM6 8QG Castle Insurance and Mortgage Services:- 3 Western Parade, Woodhatch, Reigate, RH2 8AU Chancellors Estate Agents:- 38 Commercial Way, Woking, GU21 6EN Chris Havill:- 250 Wickham Road, Croydon, CR0 8BJ Chris Powell:- Old Bake House, Farnham, GU9 7PG Drummonds:- 99 High Street, Thornton Heath, CR7 8RY E.M.S:- 68 Cheam Road, Epsom, KT17 1QF Epsom Financial Centre:- 3a High Street, Epsom, KT19 8DA Ferndowne Financial Services Limited:- Thames House, Walton on Thames, KT12 2QA First Review Limited:- 19 Duke St, Richmond, TW9 1HP First Stop Finance:- 39 Temple Road, Thornton, CR0 1HU General Accident Insurance Group:- 2 Upper High Street, Epsom, KT17 4QJ Gold Flexible Mortgages:- 14 Cherry Street, Woking, GU21 1EE Graham Brown and Company Life and Pensions Limited:- Trevone House, Guildford, GU1 4EY Harvest Financial Management:- 37 Willson Road, Englefield Green, Egham, TW20 0QB Hearnden Associates:- The Press, Lingfield, RH7 6BH International Mortgage Plans:- Landings, Weybridge, KT13 0UA Jade Mortgage Services Limited:- Windmill Business Centre, Mitcham, CR4 1HT Key Financial Mortgages Limited:- 25A Chipstead Valley Road, Coulsdon, CR5 2RB Key Selection:- 12 50 Kingsgate Road, Kingston Upon Thames, KT2 5AA Kingsleigh Mortgage Co:- 12 Croydon Road, Caterham, CR3 6QB Kudos Mortgage Services:- 3 Greenham Walk, Woking, GU21 3HB Lifetime Associates:- 32 Manship Road, Mitcham, CR4 2AZ Money Box:- 77d Manor Road, Wallington, SM6 0DE morgage bureau:- 34 / 34a High Street, Knaphill, Woking, GU21 2PY Mortgage and Pension Advice Centre:- 154b Station Road, Addlestone, KT15 2BD Mr J Withall:- 216 Addington Road, South Croydon, CR2 8LD Rajani and Associates:- Kitterick, Woking, GU22 7DU Richfields Firth:- 59 Nutfield Road, Merstham, Redhill, RH1 3ER The Mortgage Solution Limited:- Kingstons House, Kingston upon Thames, KT2 7AD The Mortgage Store Surrey:- 3 High Street, Carshalton, SM5 3AP Westminster Mortgage Consultants:- 5 Yorke Road, Reigate, RH2 9HH Wiseryn Credit Company Limited:- 92 Parl Lane, Croydon, CR0 1JF