Hi Capricorn
This is a very interesting question and would probably be worthy of a Key Post.
Please provide the full details in the
Case Study format so that we can give a full answer.
As I see it, the general principles are as follows:
Pay capital off the loan with the highest after tax interest rate.
If the interest rate is the same on a buy to let and a home loan, pay off the home loan as the tax relief is greater on a buy to let
If you are worried about being unable to service the loans, it suggests that you have too much property and borrowings. You should consider disposing of some of the properties.
The Mortgage Arrears Code protects your home from penalties for falling into arrears e.g. penalty interest or loss of tracker. It does not protect the buy to lets, so it might be worth keeping up the buy to lets, to make sure you are not penalised.
If you are in such serious negative equity that you are effectively insolvent, then hold onto the properties and hope that a property price rise will rescue you.
The Personal Insolvency Act prioritises retaining your own home. So it could be possible to retain a home with positive equity in it while getting a write-off on the buy to lets.
If you have unrealised Capital Gains, the order in which you sell your properties is important.
If you have a Bank of Scotland mortgage, you may be able to do a deal.
But, as I say, provide the full information and we can tailor the suggestions to your particular needs.