You are reading a single comment by @Polygon and its replies.
Click here to read the full conversation.
-
My understanding is that interest only mostly made sense because you would subtract the interest costs from the tax you pay on the rent you receive, so you get to keep more of it - there are risks as you still need to be saving the capital repayments too. However, tax treatment of residential rental properties is changing (you get a limited deduction and may still pay tax even where you don't make an economic profit) so that is called into question.
I think you need to run the sums and see what is more profitable. IMO, tax on rent is the main reason why renting one place while renting out your own is likely to be less cost efficient than just owner-occupying, but YMMV
andyfallsoff
@Polygon
Going to let my flat, and rent someone else's, because I'm moving town. Renewing the mortgage because it was up anyway. Reason for not selling up immediately, is that if things go tits up, I have a safety net and can move back, also house prices here rose by nearly 10% last year (although I think that's slowing a little). If things go well in new town I'll sell up in a year and buy there.
Is the sensible choice to go interest only (and save my money for legal fees on the next one) or repayment mortgage?
Currently looking at repayment with 0 early exit fees for flexibility, but that was sort of by default as I've no idea about interest only.