Hi all,
I am a newbie to the forum so please be gentle. My situation is as follows. I now own a one bedroom house in Shrewsbury having bought this over the last 25 years through a mortgage which has just completed. I have had the house on the market for the last 10 months or so without even getting as far as an offer being made to me.
My life situation is such that I want to move quite badly, so renting my house out is the next best option, particularly as the selling price I would receive now is as low it is likely to be for some time past or future. I understand that as I own the property and don’t have a mortgage that all the rent minus expenses would be taxable.
I do also have considerable debt on credit card so one avenue for me to pursue would appear to be selling part of my house back to a Bank in an equity release type mortgage to give me the money to pay these debts off in part or whole. The questions I therefore have would be as follows
1) Would I be able to get some sort of mortgage on a house I already own if this house was to be then rented out? The amount I would need to borrow would not exceed 40% of the property and I could borrow considerably less than this if there are thresholds at which it becomes cheaper to borrow or easier to obtain.
2) Presuming the answer to 1) is yes, can I then use this mortgage (or equity loan as it would most likely be called) to offset my profit made in rent thus reducing my tax burden or would HMRC take the view that as I have already owned the property outright this offset would not be allowed?
The likely rental income on the property would be around £350 - £400 p/m and I just break into the 40% tax bracket mainly due to the amount of overtime I work so I fall into the unlucky category.
I would appreciate any assistance on a financial strategy to my situation,
Many thanks
RobC
I am a newbie to the forum so please be gentle. My situation is as follows. I now own a one bedroom house in Shrewsbury having bought this over the last 25 years through a mortgage which has just completed. I have had the house on the market for the last 10 months or so without even getting as far as an offer being made to me.
My life situation is such that I want to move quite badly, so renting my house out is the next best option, particularly as the selling price I would receive now is as low it is likely to be for some time past or future. I understand that as I own the property and don’t have a mortgage that all the rent minus expenses would be taxable.
I do also have considerable debt on credit card so one avenue for me to pursue would appear to be selling part of my house back to a Bank in an equity release type mortgage to give me the money to pay these debts off in part or whole. The questions I therefore have would be as follows
1) Would I be able to get some sort of mortgage on a house I already own if this house was to be then rented out? The amount I would need to borrow would not exceed 40% of the property and I could borrow considerably less than this if there are thresholds at which it becomes cheaper to borrow or easier to obtain.
2) Presuming the answer to 1) is yes, can I then use this mortgage (or equity loan as it would most likely be called) to offset my profit made in rent thus reducing my tax burden or would HMRC take the view that as I have already owned the property outright this offset would not be allowed?
The likely rental income on the property would be around £350 - £400 p/m and I just break into the 40% tax bracket mainly due to the amount of overtime I work so I fall into the unlucky category.
I would appreciate any assistance on a financial strategy to my situation,
Many thanks
RobC