On my primary residence, I have two mortgages (A and B). Mortgage A is a loan taken out when I bought the house and so it is not tax-deductible. It is a lifetime tracker with a current rate of 3.74%.
Mortgage B is a seven-year fix at 1.98%, with the fixed rate ending on 31 December 2023. I took this loan out at the time for investment in my buy-to-let (BTL) properties, so I receive the 20% tax credit each year on any interest I have paid that year on mortgage B. I will likely have substantial cash available soon from selling a BTL property. If current rates are anything to go by, I will be facing a much higher rate when I come to re-mortgage loan B at the end of 2023. If I pay off loan B at the end of 2023, does the tax credit I receive from it die with the loan or can I transfer it to the other mortgage (A) on my home?
Arthur Weller replies:
As you have written, if you pay off mortgage B, the tax credit you receive from it dies with the loan. The tax credit is not transferrable to a personal loan. If you sell a BTL and pay off the associated loan, you are no longer using borrowed money to sustain your property business, so there is no reason why you should receive any tax credit.