Remortgage home and then rent out

Hi,
I am starting to build a new home and considering mortgage options. My existing home is mortgage free for the last few years and I'm about to put it up for sale.
However, with the current market I am open to holding onto my existing home and renting it out when I move. In this case I will need a mortgage for the build cost.
Should/Can I consider using the equity in my existing home to secure the mortgage I need for the build? In this way if I do hold onto my existing house and rent it out I could avail of interest relief on rent received.
I understand I would need to switch the mortgage to a buy-to-let once the house is no longer my PPR, but the interets relief on rent would more than compensate for that.
Thanks for any advice.

This is essentially a property investment query so has been removed from Mortgages and Buying and Selling Homes which is primarily for owner occupier/PPR queries.

When renting out a former PPR the only interest that can be set against rental income is that on any loan(s) used to purchase/renovate the property. Since the property in this case is mortgage free you cannot remortgage it and use the money for other purposes (the construction of a new PPR) and set the interest against rental income. What matters is not what property or asset the money is secured against but what it is used for. In this case if you remortgage as outlined then you can claim owner occupier mortgage interest relief on any interest but you cannot set the interest against rental income. You should probably also look at this key topic:

Sell home or keep as an investment?

Thanks for the info Clubman. So I might as well just take out the mortgage on the new build.
Now I need to figure out what should be my cutoff point for selling or keeping the existing house. Lots of food for thought in the key post - thanks.

BTBL said:

Thanks for the info Clubman. So I might as well just take out the mortgage on the new build.

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Securing funding for the new build is the main issue. What asset you secure borrowing on probably doesn't matter that much?

Now I need to figure out what should be my cutoff point for selling or keeping the existing house. Lots of food for thought in the key post - thanks.

Click to expand...

There are lots of other threads on this issue and the Property Investment FAQ and key posts are also worth reading.