You own the property either way, but if you don't pay down the mortgage you also have a large debt to go with it
But if you've invested the savings, you can pay off that debt and then some.Of course, I'm just wondering what happens if they don't. I'm wondering what the rules are if they just leave it until the mortgage has to be settled.
and what if no lender will give them a mortgage? Maybe there are no rules, I just thought there may be regulations that stop the lender repossessing on day 1 etc - for example, if the lender had to accept interest payments at their standard variable rate for at least 12 months before they're allowed to repossess. No worries if it's not something you've come across, I just wanted to know.
I do get the logic, it's the "if you've invested the savings" bit that very many BTL landlords don't do though. Instead treating all the profit as income and then ending up with your scenario. Paying off the mortgage on a monthly repayment basis removes the possibility. It all depends on the sums involved of course but it's really not as simple as interest only good/repayment bad. At all.You own the property either way, but if you don't pay down the mortgage you also have a large debt to go with it
Firstly please note we're only talking about Buy To Let properties. Properties where you're paying tax on the rental income.
Yes. Unless you've got your BTL in a company, this basically no longer applies from now. A BTL now is a pain.
The tax rules said that for the loan interest to be tax deductible, the loan had to be used to purchase the property in the first place, but many investors used equity release loans (in their BTLs) to help buy more BTLs to expand their portfolio and their accountants argued that the loans were being used for purchasing BTLs and treated the whole lot (all properties and morgages) together. I don't think you'd get away with it if you were moving your home mortgage.
Unless the rates are significantly different, paying off your home mortgage surely beats paying off a BTL? As for doing something else with it, that depends how good you are at investing
Well yeah obviously it's financially better in the long term to pay off a mortgage than piss your profits up the wall, that goes without saying. But the latter should be more fun
It's not the best way to invest though (although the rule changes are affecting that).
Up until the rule changes, can you give me an example of how BTL repayment beats interest only (comparing with party boy doesn't count)?
Yes. Unless you've got your BTL in a company, this basically no longer applies from now. A BTL now is a pain.
The tax rules said that for the loan interest to be tax deductible, the loan had to be used to purchase the property in the first place, but many investors used equity release loans (in their BTLs) to help buy more BTLs to expand their portfolio and their accountants argued that the loans were being used for purchasing BTLs and treated the whole lot (all properties and morgages) together. I don't think you'd get away with it if you were moving your home mortgage.
Unless the rates are significantly different, paying off your home mortgage surely beats paying off a BTL? As for doing something else with it, that depends how good you are at investing
Well yeah obviously it's financially better in the long term to pay off a mortgage than piss your profits up the wall, that goes without saying. But the latter should be more fun
It's not the best way to invest though (although the rule changes are affecting that).
Up until the rule changes, can you give me an example of how BTL repayment beats interest only (comparing with party boy doesn't count)?
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