Stay on Interest only or change??

M

Muffinb

Registered User
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Hi all, Need some good advice here...
Had changed form Tracker to interest only last July 12 months on our rental property as we had put house on market but no buyers...

Still have it on IO but its now rented again... and will stay that way for a long time yet I reckon, might never sell and keep as pension of sorts.

SHould we change back. Payments will go from 1200 to 1700 which is a lot but would itbe better tax wise and longterm for the capital on the loan etc???

Any advise very welcome....
 
If you are planning to be along term tax compliant landlord, then my advice would be to stay interest only. You can then write down all the interest against the income/rent. You should then find a place for the income that would normally be used for capital...preferably a place that earns more than whatever rate you are paying the bank for the mortgage.
 
Hi there, Thanks for the reply, would I then save this money, earn interest in it andin the longterm pay the capital off with both the savings and interest earned?? Sorry if this sounds obvious but Im dumb...:eek:

Thanks
 
Are you presuming that your lender will allow you to continue interest only for the whole of the term or have you got an agreement for long term IO? Have you considered putting the monthly balance into a pension fund? It might be the most tax efficent way forward.

www.powerinsurances.ie
 
Muffinb said:
Hi there, Thanks for the reply, would I then save this money, earn interest in it andin the longterm pay the capital off with both the savings and interest earned?? Sorry if this sounds obvious but Im dumb...:eek:

Thanks
Click to expand...

Exactly. Youd only pay the capital off when you sold the place...otherwise if you paid down the capital early guess who gets the bulk of the rental profit? the taxman.
 
Jimbobp said:
Are you presuming that your lender will allow you to continue interest only for the whole of the term or have you got an agreement for long term IO? Have you considered putting the monthly balance into a pension fund? It might be the most tax efficent way forward.

www.powerinsurances.ie
Click to expand...

any banks ive used have always called out a time limit on IO - however none have ever enforced it. Go figure - as long as you timely pay the debt they should be pretty happy with the arrangement.
 
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