Mortgage on ppr for investment property

[folly]

Hello

Could anyone please advise on the following:

Mr + Mrs Folly are about to purchase an investment property in UK and our mortgage options for same are:

(I) Release equity on ppr to bring mortgage up to 60% of house value or
(II) Take out a mortgage directly on investment property (prob an offset mortgage).

The benefit of ppr mortgage is lower interest rates. My question is can we still claim interest relief against the rental income if we have the mortgage out on our ppr?

Also, do we need to register with PRTB or not (as property is in UK)?

Many thanks
Folly

 

[JohnBoy]

Option one does mean a lower mortgage rate but this may turn out to be something of a false economy as you will then be exposed to currency fluctuations.

 

[ClubMan]

My question is can we still claim interest relief against the rental income if we have the mortgage out on our ppr?

I presume you mean can you offset interest on such a loan against rental income? If so then the answer is yes. It's what the money is used for and not what property/asset it is secured on that matters in this context.

 

[folly]

Johnboy and Clubman thanks for your replies, much appreciated. Yes Clubman that is what I meant and it sounds like good news for the follys on that front! Johnboy I get what you're saying but the interest rate is sufficiently lower, compared to investment mortgages, to mitigate against the fluctuations.

 

[JohnBoy]

This still means that you are funding a sterling denominated asset with a euro denominated liability. How do you know that the currency moves will be offset by the lower interest rate?

 

[folly]

Sorry Johnboy, I mistook what you were saying. We will be subject to this currency problem as whichever mortgage option we go for will be in euro. I thought you were referring to opting for fixed mortgage rates.