Can I rent out home to fund move to Australia?
I own my £500,000 house outright. I plan to emigrate to Australia and would like to borrow £250,000 as an interest-only loan against the value of my house.
I would use this money to buy a house in Australia and fund the loan by renting out my UK house. Would I be entitled to tax relief on the mortgage interest payments? IE.
Melanie Bien, of mortgage broker Savills Private Finance, replies: Yes, providing you have worked in the UK. You will need a buytolet mortgage on the UK property because you are renting it out.
A lender will want evidence that the likely rent will cover the mortgage plus a margin - usually the rent will need to be 120% of the monthly mortgage payment.
Most landlords take out a buy-to-let loan on an interest-only basis and then offset the mortgage payments against the rent for tax purposes.
So if the monthly rent is £1,700 and the mortgage £1,300, you pay tax on £400.
It might also be worth appointing a managing agent to run your UK property. Choose an agent who is used to this situation and knows the rules governing non-residence.
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