Are buy to let mortgages interest only?
Buy to let mortgages can be set up as interest only or repayment, depending on what’s best for you.
Most landlords select the interest-only option when applying for a buy to let mortgage. It means the monthly mortgage payments are lower so the cash yield from the property is increased. This allows the landlord some additional income each month while the property increases in value over time.
The disadvantage is that your mortgage balance does not decrease each year so there needs to be a plan on how it will eventually be repaid. This could include selling the property.
Even with an interest only mortgage you can still make extra lump sum payments during the year if you prefer to see the mortgage balance reducing.
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