Investment question re: Property

[jamescodriver]

I have an opportunity to purchase a flat (as BTL) for a good price. At the moment i could either put down a decent deposit and get a small mortgage or i could pay for it outright and then mortgage it in six months (having had 6 months clear ownership which a lot of banks and building societies are looking for) for its "real" market value and be able to leave less of my money in the property but still leave a reasonable deposit .

I'm happy with the values as i work as an Estate Agent, just wondering which would be the better way to go from an investment point?

Any thoughts?

[Mx_Stu]

I can't really advise from an investment point of view, but from a tax point of view any interest that you pay on a mortgage will be an allowable expense against rental income. As such for every £1 you pay in mortgage interest you will save 20p/40p in tax.

[jameshaworth]

Mx_Stu said:

I can't really advise from an investment point of view, but from a tax point of view any interest that you pay on a mortgage will be an allowable expense against rental income. As such for every £1 you pay in mortgage interest you will save 20p/40p in tax.

Good advice.

Also if you do purchase the flat outright and then plan to remortgage it again after 6 months do check first that the property would be eligible for a BTL mortgage. As many/most BTL lender's now have fairly strict rules regarding flats, eg. new build, Loan-To-Value, minimum property value, their current exposure in that particular block etc.

I have seen people buy with cash and then struggle to get their equity back out.

Also it depends what you feel will happen to BTL interest rates over the next 6 months? Personally I would say buy with cash and remortgage - but nobody knows for sure!!