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Do I need a buy to let mortgage ?

Last post Wed, Dec 03 2008, 5:36 PM by affinity. 14 replies.
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  •  Wed, Dec 03 2008, 5:36 PM

    Re: Do I need a buy to let mortgage ?

    .OK solicitors talk to the Inland Revenue but lender's don't. Therefore the question of what you tell your lender is a totally different question to what do you tell the Inland revenue

    Pls note it is not u who gives you the IR the info, it is the solicitor & also pls don't encourage people to submit wrong information to lenders, it is them not u who would have to face consequences....I'm sure the purpose of this forum and the original question was for general information and not mortgage fraud

    • Post Points: 5
  •  Tue, Dec 02 2008, 7:45 PM

    Re: Do I need a buy to let mortgage ?

    OK solicitors talk to the Inland Revenue but lender's don't. Therefore the question of what you tell your lender is a totally different question to what do you tell the Inland revenue. Obviously you should be telling them both the truth but..........
    • Post Points: 20
  •  Mon, Dec 01 2008, 9:54 AM

    Re: Do I need a buy to let mortgage ?

    Just in case anyone thinks " I wont inform them" It is automatically done by all conveyancing solicitors

    The Finance Act 2003 was introduced in December 2003. Under this Act, every purchase transaction must be notified to the Inland Revenue, whether or not stamp duty is payable.

    • Post Points: 20
  •  Mon, Dec 01 2008, 9:51 AM

    Re: Do I need a buy to let mortgage ?

    Any income you receive from your property is added to your other earnings to assess your tax bill. If you are a higher-rate taxpayer, you will pay 40%.

    Interest paid on a buy-to-let mortgage can be offset against tax, but capital payments cannot. Therefore, if capital appreciation on your property is good and you want to maximise your tax breaks, it makes sense to stick to an interest-only mortgage

    If you buy a second property either without a mortgage or by re-mortgaging your existing home and then take out a small buy-to-let mortgage you can still offset all your interest payments against tax.But if you purchase a buy-to-let property with cash and then take out a mortgage on it, you cannot then offset the interest paid on it.If you are a landlord and you move into a buy-to-let property after the last tenant has moved out, you can claim the property as your “principal residence”, entitling you to the last three years’ worth of gains tax free.You must take up residence and be able to prove that you live there - for instance by having your mail redirected and being able to show that you used the facilities there by keeping copies of utility bills.There can be further exemption on all buy-to-let properties where the landlord takes up residence in this way.Decide for yourself who knows what they're posting here!
    • Post Points: 5
  •  Mon, Dec 01 2008, 9:44 AM

    Re: Do I need a buy to let mortgage ?

    If you carry out any repairs to your property, these costs can be offset against your tax bill. However, if you carry out repairs to the property before the tenant moves in, you may not be able to claim this as a tax-deductible expense. Also, improvements cannot be deducted from your tax bill. This can have unforeseen consequences
    • Post Points: 5
  •  Mon, Dec 01 2008, 9:37 AM

    Re: Do I need a buy to let mortgage ?

    Fillip66..........You really have to be careful what you post here....

    The Finance Act 2003 was introduced in December 2003. Under this Act, every purchase transaction must be notified to the Inland Revenue, whether or not stamp duty is payable.

    • Post Points: 5
  •  Sun, Nov 30 2008, 11:48 PM

    Re: Do I need a buy to let mortgage ?

    Thanks Fillip I thought that was a little strong.

    The reason for my last post was that I had thought to mortgage my existing property and buy the new place with cash, thus no one to tell, no criminal activity and all the rental income available to spend on the house. I didn't expect quite that response but maybe I should have made myself clearer.

    • Post Points: 35
  •  Sun, Nov 30 2008, 11:27 PM

    Re: Do I need a buy to let mortgage ?

    Ignore her jester she's just bitter about some comments I made in the past. There's nothing against the law about owning 2 properties, a holiday home etc. It's also not illegal to rent out a property you have a residential mortgage on, the reason to inform the lender is that they may make you redeem the mortgage and take out a BTL mortgage or you can apply for consent to let with the residential mortgage and they will charge you more for the mortgage, although I know at least 2 people who have rented out their properties after having lived in them and the lender allowed them to continue with their current mortgage on the same terms. What's this nonsense about the mortgage solicitor having to inform 'the authorities', if you were buying it to do up and sell on or as a holiday home who are they going to inform?
    • Post Points: 35
  •  Sun, Nov 30 2008, 6:16 PM

    Re: Do I need a buy to let mortgage ?

    This last reply is a disgrace, you would be in total breach of yr mortgage contract. I think you also have to more informed what you can claim and at what point you can claim any improvements. Do you think the conveyancing solicitor doesnt have a duty to inform "the authorities" on purchase of property...........also rules and tax implications around more than 1 registered residential address. Instead of seeking information on a general discussion form you should seek financial advice, hopefully you won't be encouraged to break the law
    • Post Points: 20
  •  Sun, Nov 30 2008, 3:08 PM

    Re: Do I need a buy to let mortgage ?

    I did think about letting my current property, but then thought to spend the rental income on the renovations bit by bit. I.E. windows one year, kitchen one year, roof the next etc. That way although not being able to claim the mortgage back through rental at least the money coming in is paying for the work to be done on the house, but I would need the place empty whilst the work was going on.
    • Post Points: 5
  •  Sun, Nov 30 2008, 2:39 PM

    Re: Do I need a buy to let mortgage ?

    You could get it on a residential mortgage whilst you do the work and then decide whether or not you want to tell the lender, you could keep it from them so long as they don't need to know what insurance you take out or the letting agent does not tell them.

    Why not live in the property once it's done up and rent your current property?

    • Post Points: 35
  •  Thu, Nov 27 2008, 11:24 PM

    Re: Do I need a buy to let mortgage ?

    B&C's = Building & Contents, however you would require a Landlord's policy.......if renting unfurnished you would only require Buiding's.......you would aso require some other certificates such as gas etc.......also rental income normally has to be approx 125% of the mortgage payment, the rental income achieveable is recorded by the surveyor on the valuation.....
    • Post Points: 5
  •  Thu, Nov 27 2008, 4:24 PM

    Re: Do I need a buy to let mortgage ?

    Many thanks for the reply, just one thing, what are B and C costs ?

    • Post Points: 20
  •  Wed, Nov 26 2008, 10:44 AM

    Re: Do I need a buy to let mortgage ?

    Strictly speaking: if you will be renting the property out initially you do need a buy to let mortgage, and it is unlikely that HSBC would lend to you on a residential basis given that you plan to let it out before you move into it. You would also need to fill in a tax return as you will be getting an income, even if your tax return shows you have made no profit. You can deduct interest payments on the mortgage, B&C costs, any letting costs and wear and tear from any income you make so it is unlikely you will make a profit.
    • Post Points: 20
  •  Wed, Nov 26 2008, 9:24 AM

    Do I need a buy to let mortgage ?

    I am looking to purchase a property with a view to living in it once the market picks up and I can sell my current property that has no mortgage on it. In the interim period, after doing some work on the new property I would be looking to rent it out but I have arranged an interest only tracker with HSBC. Would the bank be happy to lend me this money under these circumstances ? I am not looking to make a profit just cover the mortgage, my current earnings mean that I just fall short of the 40% tax bracket and I don't want to earn any more as I will be taxed higher on my savings. Also I don't wish to fill in a tax return.
    • Post Points: 35