Open up a separate rental business bank account to manage your buy to let transactions

Posted under General by Alan

It may make sense to opt to remortgage your buy to let property if you have scope for the same. In such a scenario, you can make use of the extra borrowing for paying down the mortgage applicable on your primary residence. This way, you will get more relief and also have less to pay on your main or prime property.

Financial experts advise property investors to open up a separate ‘rental business bank account’ and ensure that they should put into the business account any extra money that is borrowed. If you later draw out from that business account to purchase something else, it would be treated as drawings from your business. You may even get business gifts as an incentive to open the account.

Another crucial piece of advice to buy to let investors is to plan ahead so that the size of your loan gets shrunk over a period of time in a systematic and phased manner. Banks have been gradually cutting the maximum amount they will lend to as less as 75 per cent of a property’s value. You should consider setting up a savings account. Any spare rent can accrue in it so you can cut down the ‘loan-to-value’ when the time to remortgage arrives.

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