Should I sell my investments and pay off some off my mortgage?

Why not consider *keeping* all your investments apart from the flat? With the prospects for substantial further capital gains bleak, do you really have good reason to hang on to it? £472pm is less than

5% of £114k, and you don't get to keep all the £472 anyway, since you have to pay income tax on it. If, however, you were to turn the flat into £114k cash, you could pay this off your mortgage and save yourself probably more than £475pm of *real* money (from your income stream which has already been taxed).

OK, I've glossed over a few details such as that some of the £114k will go on selling fees and there may well be some CGT to pay, but you get the general idea.

will tell you once the details are registered.

I feel the same as Ronald given that the UK stock market is at fair value and the property market is overvalued and paying down the mortgage is one of the best investments you can make. I'd keep one property for it's utility value, even if you rent it out whilst you're elsewhere, and sell the other one and pay down any mortgage and invest the rest in a consistently above average performing high income fund & or a DIY version

Daytona

In message , DA

Good point, if the sums add up. Depends on the OP's tax status if he's an HRTP it's likely to be a more clear-cut case than if he isn't. The higher interest rate on the letting loan, minus tax relief, could well run neck-and-neck with the lower interest rate on the residential loan.

If the sums do add up, why did he pay off the flat loan in the past, in preference to paying down his home loan?

In message , Ronald Raygun writes

Yes, I wondered too, perhaps it was his original abode. He may enlighten us??????

Simple really, I was living in the flat when I bought the house and I was just paranoid about having 2 mortgages hanging over my head!

I'm grateful for all replies received here - I'm no nearer making a decision though!

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AFAIK you won't get tax relief on a loan of this sort unless it was used for the initial purchase.

Rob Graham

Yes, it is now possible - up to the level of its original purchase price (or, if PPR previously, MV at the of introduction into the property rental business).

Ta.

R

In message , Doug Ramage writes

Am I right in thinking the capital account cant go overdrawn?

That you say "now" suggests there has been a change, but there hasn't been an actual change in the law, has there? It always has been, and continues to be, the case that to qualify for relief there has to be a business purpose to the loan raised. Presumably there has simply been a change of interpretation (how? why? IR acquiring a Mr Nice Guy image? a major court case which IR fought tooth and nail and lost?) to the effect that where an existing business asset is to be (re-)financed by way of a commercial loan instead of by way of the owner's capital account, through which the property was introduced, this does not invalidate the business purpose of the loan, which is to allow the business to continue to use the asset, while simply allowing the owner to get his equity back.

On paper, all that happens, in effect, is that on the balance sheet the asset's matching liability moves from the owner's capital account to an entry in the Long Term Liabilities section for the appropriate lender.

There has been a change - the introduction of Self Assessment.

From 1995-96, Schedule A is treated, broadly speaking, like a Schedule D Case 1 business. This enables loan interest to be treated as a business expense. Prior to this loan interest had to comply s354, IIRC, ICTA 1988 to be allowable.

Yes, that's correct.