Cleared buy to let mortgage wise or unwise?

Discussion in 'Mortgages and buying and selling homes' started by gebbel, 7 Mar 2019.

  1. gebbel

    gebbel Frequent Poster

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    I recently received a payment of €11K from my mortgage provider under the redress scheme. I used it it pay off the last of a buy to let mortgage at 3.45% interest. My PPR mortgage is a tracker with €180K remaining over the next 23 years.
    I now won't have any mortgage interest relief to write off on the property thats rented out.
    Just wondering if it was perhaps unwise to have done this, and not just reduced the term on my main mortgage (which has just come out of negative equity after 12 years).
    I really should have asked this question a month ago.
    Thanks.
     
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Very little good comes from Monday Morning Quarterbacking.

    However, take comfort from the fact that you did the right thing.

    The 3.45% is circa 90% deductible for tax purposes so call it about 1.9% in after tax terms (assuming you pay tax at circa 50%).

    Your home is on a tracker, which is likely to be less than 1.9%.

    But even then, if I owed €11k on one mortgage and €180k on another, and then €11k dropped into my lap, I’d probably clear the €11k one just to make life simpler.

    You made the right call financially and administratively.
     
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  3. Brendan Burgess

    Brendan Burgess Founder

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    Agree fully with Gordon with one addition.

    It doesn't really matter that much.

    Even if you had made an error, it would be 1% of €11,000 which would be €100 a year.

    But you made the right decision - so you will be better off by €100 a year.

    Brendan
     
  4. Sarenco

    Sarenco Frequent Poster

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    While it doesn't change the conclusion, it's probably worth pointing out that mortgage interest payments are now 100% deductible.
     
  5. Gordon Gekko

    Gordon Gekko Frequent Poster

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    If only!

    Sadly, they’re not.

    As per my earlier post, they’re 90% deductible for 2019, rising to 95% in 2020, and then hopefully back up to 100% in 2021.
     
  6. Sarenco

    Sarenco Frequent Poster

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  7. Sarenco

    Sarenco Frequent Poster

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  8. Gordon Gekko

    Gordon Gekko Frequent Poster

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  9. Sarenco

    Sarenco Frequent Poster

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    Would it even cover the price of a pint?;)
     
  10. RedOnion

    RedOnion Frequent Poster

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    There's more subtle ways of asking for a date!! :p
     
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  11. Gordon Gekko

    Gordon Gekko Frequent Poster

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    You mean a second date
     
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  12. RedOnion

    RedOnion Frequent Poster

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    At least he's learning.... Making sure you'll pay this time!