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Remortgaging UK Property

Remortgaging UK Property

Old Feb 4th 2015, 4:06 pm
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Default Remortgaging UK Property

Hi there,

We have a flat in London which we kept when we moved here two years ago. We're now looking to buy here in Canada and the mortgage is all but paid up on the UK property. I am investigating with a UK mortgage broker whether we can get another mortgage on the property and then exchange to C$ in order to part fund a purchase here. Has anyone had any experience with this? As I see it we could write off the mortgage interest against the rent we receive and so make it more tax efficient than getting a mortgage here. Or, would the (presumably) higher mortgage rate/fees offset this advantage? We would also quite like to keep the flat although with price rises we would make some profit if the property is sold now. Does anyone have any advice either way? Also, if we do go ahead which are the best methods of exchanging currency for fairly substantial amounts?

PS I did some searches but couldn't find much info on the Canadian forum. Apologies if there are already threads on remortgaging.
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Old Feb 4th 2015, 4:13 pm
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Default Re: Remortgaging UK Property

Originally Posted by jrr773 View Post
Hi there,

We have a flat in London which we kept when we moved here two years ago. We're now looking to buy here in Canada and the mortgage is all but paid up on the UK property. I am investigating with a UK mortgage broker whether we can get another mortgage on the property and then exchange to C$ in order to part fund a purchase here. Has anyone had any experience with this? As I see it we could write off the mortgage interest against the rent we receive and so make it more tax efficient than getting a mortgage here. Or, would the (presumably) higher mortgage rate/fees offset this advantage? We would also quite like to keep the flat although with price rises we would make some profit if the property is sold now. Does anyone have any advice either way? Also, if we do go ahead which are the best methods of exchanging currency for fairly substantial amounts?

PS I did some searches but couldn't find much info on the Canadian forum. Apologies if there are already threads on remortgaging.
UK mortgages have become much harder to obtain in recent years, especially if there is anything non-standard going on.
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Old Feb 4th 2015, 4:35 pm
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Default Re: Remortgaging UK Property

Originally Posted by jrr773 View Post
Hi there,

We have a flat in London which we kept when we moved here two years ago. We're now looking to buy here in Canada and the mortgage is all but paid up on the UK property. I am investigating with a UK mortgage broker whether we can get another mortgage on the property and then exchange to C$ in order to part fund a purchase here. Has anyone had any experience with this? As I see it we could write off the mortgage interest against the rent we receive and so make it more tax efficient than getting a mortgage here. Or, would the (presumably) higher mortgage rate/fees offset this advantage? We would also quite like to keep the flat although with price rises we would make some profit if the property is sold now. Does anyone have any advice either way? Also, if we do go ahead which are the best methods of exchanging currency for fairly substantial amounts?
Mortgaging a rental property is always a good way of offsetting tax, however you would have to do the math based on your personal circumstance and borrowing costs. Other considerations are capital gains tax (in the UK under the new rules and Canada) when you decide to sell, fluctuations in FX. Once you have done the exchange, an increase in the value of GBP results in you owning more in CAD as time goes on. Less of an issue of the proceeds of the sale in the UK if you sell pay off the mortgage. GBP has strengthened by about 20% in the past 12 months.

Depending what you call substantial amounts. I do FX through commercial depts of banks (RBC mostly), FX houses (Western Union Business) and sometimes write a cheque to drop it into my account.
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Old Feb 4th 2015, 6:36 pm
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Default Re: Remortgaging UK Property

You won't be able to write it all off against tax though. Any capital paid off would be subject to UK tax as well if you are in profit in rent vs mortgage payment..

Are there any lenders about who will give you a mortgage as a non resident?

Also within two yrs I believe you are not subject to CGT although I'm not sure if you are non resident whether you get that relief?
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Old Feb 4th 2015, 6:37 pm
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Default Re: Remortgaging UK Property

Originally Posted by jrr773 View Post
...As I see it we could write off the mortgage interest against the rent we receive and so make it more tax efficient than getting a mortgage here...
In Canada you can write of interest on money borrowed to earn taxable income. However, you cannot write off interest on money borrowed to buy a principal residence, even if the loan is secured against an investment property.
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Old Feb 4th 2015, 9:02 pm
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Default Re: Remortgaging UK Property

Originally Posted by Tirytory View Post
Also within two yrs I believe you are not subject to CGT although I'm not sure if you are non resident whether you get that relief?
Changes in April this year.
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Old Feb 5th 2015, 1:39 pm
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Default Re: Remortgaging UK Property

Originally Posted by Aviator View Post
Changes in April this year.
I think its fairly important you get a valuation in April this year, the one for your mortage would likely low ball you which isn't in your interests
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