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I want to get a buy to let mortgage and would like to know what is the best way of getting a buy let mortgage.

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Consult a mortgage broker. You will need at least 25% of the property value as a deposit and the rate would be higher than for a residential mortgage. However you would be able to set the interest against any rent received for tax purposes. Mike



Hello Mike, Could you clarify a bit more on your last line , ''you would be able to set the interest against any rent received for tax purposes? Thanks.



Rent received is taxable, but interest paid on a loan to buy the property is an allowable expense that you can set against the income. Capital repayments are not. Most mortgage payments contain an interest element and a repayment element. They are mostly interest to start with, but gradually the split changes. Mike



Hi Mike, I am not sure how your comment above applies into my case. Please help to understand. My case : I had a flat, repayment residential mortgage and used to live in a flat until last year. Due to econimic / private reason, I have rented out that flat and the rental money I receive that covers my mortgage (changed to conscent to let) & service chage by my housing-easte landlord. May be there is a surplus of 100 pounds a month in my pocket. How does your comment above applies into my case? How much tax & how much allowable expense? Thanks.



you say the rent covers the mortgage and you have £100 left ... say your mortgage is £400 ... £100 of interest payment and £300 capital ... so your rent income is £500pcm. You can pay the £100 interest from the rent no probs, this is an allowable expense. The remaining £400 per month rental income has to be taxed at your tax rate. Over the year, your agent fees, repairs if rented furnished, etc can also be removed from the rental income before the tax is calculated. Best to consult a tax aware professional if unsure.



Basically, any expenses that you need to spend on letting the property can be used to reduce your tax bill. However, you will have to be able to prove the expenses and they must be necessary. Alternatively you can claim 10% of the rent in lieu without poviding proof. Mike



Shiblee, you ave two problems. Firstly, you should have told your lender that you're letting the property and they may choose to put you on a buy to let rate. You can't just let the property and stay on a residential mortgage without telling them. Secondly, as others have said. You have to declare ALL income on your tax return. You can then declare some of your costs (such as mortgage interest and wear and tear) and you'll then pay tax on the balance. You can't either "put the £100 in your pocket" or just assume that this is your profit since you can't offset all of your costs (such as the capital repayment part of your mortgage). I think you need some advice before you get into trouble with your lender and HMRC.