Hi all,
The situation is that I moved into a new self build some months ago and have not yet sold my old house. I am now thinking of renting this. I had the idea of raising a 2nd mortgage on this old house and paying off some of the mortgage on the new house. I thought this would simplify things and make it easier to figure out the interest to offset against rental income, that would be appropriate when effectively running the project as a "small business". Naturally, I also figured that this route would maximise the overall tax relief on both properties.
So I went to speak to the bank about a 2nd mortgage / loan and I am told that what matters to the revenue is what the money is being used for.... i.e. if it was being used too purchase this property for the purpose of renting then fine, but he says revenue would see it as borrowing to pay off the mortgage!
Anyway, the question is: Has anyone got a 2nd mortgage or loan, secured on their original house, used the money raised to pay off some of the mortgage on the Principal residence and got standard mortgage interest relief on the Principal residence and been able to include the interest on the older house as an offset against rental income?
PS. Sorry for the longwinded and possibly unclear post. Still any thoughts and experiences would be very much appreciated.
The situation is that I moved into a new self build some months ago and have not yet sold my old house. I am now thinking of renting this. I had the idea of raising a 2nd mortgage on this old house and paying off some of the mortgage on the new house. I thought this would simplify things and make it easier to figure out the interest to offset against rental income, that would be appropriate when effectively running the project as a "small business". Naturally, I also figured that this route would maximise the overall tax relief on both properties.
So I went to speak to the bank about a 2nd mortgage / loan and I am told that what matters to the revenue is what the money is being used for.... i.e. if it was being used too purchase this property for the purpose of renting then fine, but he says revenue would see it as borrowing to pay off the mortgage!
Anyway, the question is: Has anyone got a 2nd mortgage or loan, secured on their original house, used the money raised to pay off some of the mortgage on the Principal residence and got standard mortgage interest relief on the Principal residence and been able to include the interest on the older house as an offset against rental income?
PS. Sorry for the longwinded and possibly unclear post. Still any thoughts and experiences would be very much appreciated.