Increase mortgage on investment property

[BTBL]

Hi,
We have an investment property worth €280,000 with an outstanding mortgage of €80,000.
We're moving home soon and will be looking for a home loan of €350,000.
Rather than take out the full home loan on the new house should I consider increasing the mortgage on the investment property instead, to about €150,000, and reduce what I need as the home loan?

I know the interest rate will be less on the home loan but since I'm not a first-time buyer the mortrgage interest relief can only save me a max of €1200 a year and by my rough calculations I stand to benefit more from the increased tax saving on the rent on the investment property.

Firstly can I legally increase the investment property mortgage? If so would the expenses involved in taking out 2 new mortgages make this not worthwhile? I wouldn't plan on changing lender.

 

[Brendan Burgess]

HI BTBL

No. Just take out an ordinary home mortgage secured on your home.

The tax relief is given for the purchase of an investment property. It is not given on loans for other reasons, even if they are secured on the investment property.

Convert your investment mortgage to an interest only loan to maximize the tax relief.

Brendan

 

[ClubMan]

One way or another you can only offset interest on the outstanding €80K against rental income. Only interest on loans used to purchase or renovate the investment property can be offset in this way.