Out of work - What do I do with my mortgages?

webtax said:
Interest on any funds released from your investment property cannot be deducted as an expense against your rental income, so this is not a tax efficient option.
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i actually hadnt suggested releasing funds on the investment property to benefit from a tax perspective i suggested it as the current rental imcome greatly exceeds the interest on the mortgage so the OP can afford to increase the mortgage on the IP and still have the rental income cover the mortgage, the flip side to this would be the mortgage on the PPR would be further reduced thus the mortgage payments/term on the PPR will be further reduced, given cash flow will be an issue for the OP i'd focus on reducing his expenses/outflows to more manageable levels.

i'm not saying this it the right or only way to do it but its the way i'd choose based on the OP's thoughts (if it were me i'd sell the IP immediately and reduce the PPR's mortgage as much as possible)
 
The tax u pay on rental income is on the rental income – interest portion of mortgage=1625-1075=550-liable for tax

I did not know that you could claim mortgage interest on a rental property as well as on the principal primary residence. Is this true?
 
Eithneangela said:


I did not know that you could claim mortgage interest on a rental property as well as on the principal primary residence. Is this true?
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Yes, this is yet another subsidy given by Govt to (indirectly) the building industry. And just to inflame you further, the relief on a rental property is unlimited, compared to the fairly low level of interest that can be claimed on your residence.
 
Complainer, unbelievable isn't it.

To OP, Northern Rock accounts are govt. backed, the safest you place to put your money by far and probably the soundest yield wise.
 
Thanks all. Gonna make a decision by the end of the day, and it looks like it will be a mixture of all of the above! Retain the properties, pay off some of my home mortgage to make it more manageable and place some money in Northern Rock, or equal, enough for a year or two out of work (I reckon I will be back after Christmas though)... Tank
 
Hi Tank
Best of luck to you. It sucks being out of work. To me the answer seems obvious. Offload your second property - let's say you get 360k (as it's obviously overpriced at 400k) pay off that mortage and you're left with 105k - but I guess you'd have to pay capital gains tax so (guessing here) let's say you're left with 85k net. Pay 75k of that off your residential mortgage (effectively reducing that debt by more than 30%) - put the remaining 10k in the bank, gaining interest, and it's there for emergencies. Honestly, what's the point in renting out a property that just about covers the mortgage and you have the dreaded principal to pay back at the end? Who needs that added stress?

Good luck.
 
Tank said:
I currently have two properties. One, my own house worth 520K with a repayment mortgage with 245K left on it. The second, is my previous house, which wont sell at the moment and is worth just under 400K with 255K left on it (Interest only thank God). We have had to rent this out to cover its cost, which the rental currently does, and some. I just lost my job and both myself and my partner are on job seekers allowance. I have 130K in the bank and am at a critical position to make a decision.

What should I do with the 130K?

Pay part of the current mortgage?
Put on deposit?
Buy another property and rent!

My concern is that for health reasons, I wont be working for at least 3 months now and want to make a decision that secures my family in the long term.

Thanks in advance
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