What's the best way to fund the purchse of a second property?

Q I am considering using the reserve facility on my Intelligent Finance mortgage to invest in a second property with the intention of renting it out. If I only pay interest on this portion of my mortgage, could I get the same tax benefits as a buy-to-let mortgage?

JT

A The accountants I consulted doubted whether your proposed method of raising money to fund the purchase of a new property by using an existing mortgage facility would allow you to offset the interest element against the tax paid on the rental income, as with buy-to-let arrangements.

It is felt that the Inland Revenue could rightfully argue that the mortgage was originally taken out to finance the purchase of the first property, on which the available amount of borrowing is based. Apportioning the proportion of the existing mortgage used to buy the second property could be difficult to substantiate, particularly with a mixture of capital and interest repayment. However, this is a grey area, and it would be worth taking professional advice to see if there is a way round.