Top Up Home Mortgage to Pay off Buy to Let

M

MichB

Guest
Good morning, we currently have a home mortgage with a tracker rate and are considering topping up this mortgage on a standard variable rate to pay off our Buy to Let Mortgage which is at a much higher rate - can anyone advise what the tax implications are if we take this route? Thanks.
 
You won't be able to claim mortgage interest relief on the top-up funds.

I can't see any other tax implications.

Maybe a tax expert can advise.
 
Thanks for your replies, but I am more interested in checking any tax implications (i.e. tax benefits) we may loose out on and extra tax we may have to pay should be pay off our buy to let mortgage and therefore in theory the property is owned by us and rented to tenants etc.
 
Well you'll have no mortgage interest to offset against rental income, which is pretty much the largest tax implication possible. Ordinarily people would do the exact opposite of what you're describing - paying off their PPR whilst maximising the mortage on their rental properties.
 
What is owing on both properties and what are the values of each?

Also, what rates are you paying on each respective mortgage? I'd imagine you're Inv. Rate is 3% higher?
 
Thanks Jonathan.

We currently owe approx €100k on our home mortgage paying a tracker rate of interest. The apartment mortgage is approx €150k with a rate of I think 5%? not sure in today's market valuation on apartment but I reckon home would be valued in the region of €250.

The idea in theory was to top up borrowing on our home mortgage (although I understand tracker rate will not be available) at a lower interest rate than currently paying on the buy to let and therefore reduces overall monthly costs. But we need to consider if this is worthwhile and take into account tax implications etc.
 
Howitzer said:
Well you'll have no mortgage interest to offset against rental income, which is pretty much the largest tax implication possible. Ordinarily people would do the exact opposite of what you're describing - paying off their PPR whilst maximising the mortage on their rental properties.
Click to expand...

Are you sure about this? Revenue don't specify that the loan used to buy a rental property must be secured on the property itself. They just specify that for interest to be allowable against rent, the loan must have been used to purchase, improve or repair the property.

I don't see why MichB wouldn't be able to continue claiming the interest on this loan against rent, even if s/he transfers the security to the PDH.

But I'm not a tax professional so s/he should verify this with one before proceeding.
 
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