Interest-Only Buy-to-Let Mortgages

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Why Choose Ascot Mortgages

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5-star reviews on Google
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years we have been as independent mortgage and protection brokers
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customer satisfaction for finding the best deals on the UK market
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total donated to various charities

Why Choose Ascot Mortgages

0 %
5-star reviews on Google
£ 0
total donated to various charities
0
years we have been as independent mortgage and protection brokers
0 %
customer satisfaction for finding the best deals on the UK market

What Our Clients Say About Us

5.0 Based on 122 reviews from review us onLucy B. ★★★★★ Having Phil as my mortgage advisor was great from the very start! He is down to earth and speaking to him was always a pleasure. The kindness, compassion and support I have been given all the way through what can be a stressful process was immeasurable. Phil and Jardelle worked as a solid team and was able to make me feel at ease all the way through buying my first home. The team were always available and the communication between everyone was always clear and I felt safe in the hands of the company as a whole. Thank you for helping me buy my first home!Flora R. ★★★★★ I worked with Richard (Protection Adviser) for a couple of days to sort out life and critical illness insurance. Absolutely brilliant, he found me and my husband the perfect policy. Very knowledgeable and easy to get on, he definetely makes things easy to understand. Thank you for the great service provided.Matthew R. ★★★★★ I've dealt with Phil at Ascot Mortgages for a while now and Phil always comes back back to me with the right plan.Keep the good work up!rafal W. ★★★★★ I would thoroughly recommend Phil Greenwood at Ascot Mortgages ltd to anyone looking to seek advice on purchasing a home.Phil was absolutely fantastic. He made the process very smooth and easy and was always there to answer any questions I had.Shahid L. ★★★★★ This company has been truly amazing in constantly giving me the support and help i need for my mortgage and for their continuous work ethic guiding customers like myself and educating them into making the best possible decisions. My special mention goes to Phil Greenwood who deserves every single credit for his brilliant work and communication skills. The more I got to work with Phil, the more he gained my respect as he is a hugely likeable man and possibly the best mortgage advisor yet. Even after I finished my time with Ascot Mortgages, I will never lose my trust in the company and I hope they exceed their business and gain even more success and popularity.Best wishes,Shahid Latif and familyPretty L. ★★★★★ Phil helped me renew my mortgage. He was great at keeping me updated with any rate changes and secured a lower rate than at the time my mortgage went through. Thank you Ascot for your supportNikki E. ★★★★★ Huge thanks to Richard Johnson for sorting out all of my insurance policies! I had accumulated a variety of life cover and various other policies over the years that all needed a good review and refresh. Richard was extremely patient and helped me to remove the duplication and choose the best cover to suit our current needs. I have used Ascot Mortgages for over 12 years and have met several members of the team, always finding the right help and support to work through what can be a complicated and stressful time. Thanks again, Richard!Aamir R. ★★★★★ As first time buyers we had very little understanding of how to go about applying for a mortgage. Phil was so helpful in cutting through all of the formalities and helping us to decide which mortgage would be best for us also ensured we collated all the details needed and kept us up to date on progress. The process of finding the right house was very stressful but the process of choosing and applying for the mortgage and life cover has been so straight forward that, at times, we were worried it was all a bit too smooth! Thank you for guiding us through this so professionally and with real understanding and personality.Andrew T. ★★★★★ Working with Richard at Ascot has been a great experience. He listened to us and was very professional throughout. This was our first experience with Richard but we've been using Ascot now for 6-7 years. Thank you all at AscotAngie B. ★★★★★ Always give a great service and find you a mortgage in a timely fashion.Alison is awesomeAndrew M. ★★★★★ We have used Ascot Mortgages for over 5 years now and have had excellent service throughout, primarily with Alison and Kevin. Our latest dealings have been with Richard Johnson who although new to us (and to Ascot I believe) has once again provided the 5 star level of service we have come to expect. His product knowledge is excellent offering a range of options supported with consistent communication and updates, always available on the phone or on email every step of the way.Ali H ★★★★★ Excellent service, a big thanks to Natalia Barry for her excellent support with my buy to let mortgage application, Natalia was professional, transparent, and kept me informed during all the process, and thanks to Jason jones for his assistance and support.david R. ★★★★★ I have dealt with Ascot for many years now and will always go back, recently had all my insurances re done by Richard Johnston at the firm, excellent service, communication and swift actions by Richard. Great deals on all three insurances and would recommend anybody to go to Richard for help. Thanks Richard 👍Eve Alexandra C. ★★★★★ We used Ascot Mortgages to purchase a home as first time buyers, Ellie assisted us with this and went above and beyond to ensure everything went smoothly, all questions were answered, and any queries were solved.As first time buyers, myself and my partner were quite nervous and clueless as to what to expect when getting a mortgage and what not, and Ellie made this so simple and explained everything in a way that we thoroughly understood what was happening with our house buying journey, without it being pure jargon.I can't thank Ellie enough, she truly has been a star during the whole experience and is an asset to Ascot Mortgages.She is someone who I would definitely recommend to friends and family if the opportunity arises, and has made this whole experience a very stress free and exciting one!Thank you for everything Ellie!Emma W. ★★★★★ Alison helped me to get the right mortgage for my current situation and was very supportivehelen L. ★★★★★ Phil Greenwood dealt with my recent remortgage, he made sure I had the best product to fit our HMO criteria. Then chased solicitors for me and made sure I completed around the date I wanted to avoid my ridiculous rate I was about to be switched to. Thanks Phil, great job! Ready for my next mortgage now so I will be coming back 🙂Mark C ★★★★★ Excellent service from an excellent representative. Very professional and helpful company. Thank you for all your helpDamian L. ★★★★★ I recently purchased a buy-to-let from Auction and Ascot Mortgages, in tandem with Ascot Bridging Finance, supported me through the whole process. Once the property purchase via a bridging loan was complete, Ascot Mortgages worked out the best options for me, despite the Banks rising interest rates and spiralling UK inflation and managed to secure me a competitive mortgage rate for that property. I wouldn't hesitate in going back to Ascot Mortgages in the future and look forward to working with them again in the near future. Thank you for everything you've doneJuliet B. ★★★★★ Thank you to Alison for helping us and sorting out our mortgage. Swift, reliable and very helpful. Very much appreciated. God bless you abundantly 👍👌🤝gareth P. ★★★★★ Been with Alison and team for more than 25 years. Needless to say, very happy...Jo T. ★★★★★ We have been using Ascot Mortgages for the last few years and they have done 11 buy to let products for us.We have found Alison, Phil, Jason, Jardelle and the team to be excellent at finding the best product for us and to work at pace when we are buying from auction and have a deadline to meet.Communication is very good and nothing is too much troubleBen H. ★★★★★ I can't recommend Ascot Mortgages highly enough.We have used them for all of our Mortgages . They are professional and friendly and have walked us through all our options, they always have the time to talk to you and go the extra mile to get you the best deal. It wont be long till I'm calling on their services again, I wouldn't go anywhere else.If you want a mortgage, there's only one place to go!Dog J. ★★★★★ Ascot went the extra mile to help me acquire a mortgage. With the help of Jason and Ellie I was able to get a competitive rate after 3 other firms had told me they couldn't help me. Great levels of communication throughout, I would highly recommend!Ursula B. ★★★★★ Alison was very friendly and professional in securing the right bridging for us and at a very competative price. This ensured that we were able to place an immediate offer and not miss out on our forever home. Later her help and support in finally getting our completion over the line was nothing short of a miracle. I would strongly recommend both Alison and the team at Ascot Mortgages.primrose C. ★★★★★ ALISON IS BY FAR THE BEST IN THE GAME. ALL WE CAN SAY IS THANK YOU SO MUCH. They are passionate on customer service, even in my frustrated time Alison, Jadelle, Ellie I could name them all. May the good LORD BLESS YOU.js_loader

Written by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

07.11.2023

Written by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

07.11.2023

What is an interest-only buy-to-let mortgage?

An interest-only btl interest only mortgage (buy-to-let) is a type of loan designed specifically for property investors in the UK. With this type of mortgage, borrowers only pay the interest on the loan each month, rather than paying both the interest and principal amount. The principal amount remains the same throughout the mortgage term and is repaid in full at the end of the loan term.

Are all buy-to-let mortgages interest only?

No, not all buy-to-let mortgages are interest-only. While btl interest only mortgage options are commonly  associated with buy-to-let properties, there are also repayment options available. With a repayment mortgage, the borrower makes monthly payments that cover both the interest and a portion of the principal. By the end of the mortgage term, the borrower would have fully repaid the loan.

Mortgage Repayment Calculator

Why is interest-only preferred over repayment?

Btl interest only mortgage options have several advantages that make them appealing to property investors:

Lower monthly payments

One of the main benefits of an interest-only mortgage is that it offers lower monthly payments compared to a repayment mortgage. Since you’re only paying the interest, your monthly outgoings are significantly reduced. This can be advantageous for landlords, especially if they have multiple properties in their portfolio. Lower monthly payments mean more cash flow, which can be used to cover other expenses or reinvest in additional properties.

Increased rental profits

With lower monthly mortgage payments, landlords can potentially generate higher rental profits. The difference between the rental income and the mortgage payment is larger with an interest-only mortgage compared to a repayment mortgage. This increased cash flow can contribute to the growth of your property investment portfolio or provide you with a steady income stream.

No minimum income requirements

Interest-only buy-to-let mortgages typically don’t have strict minimum income requirements. Lenders primarily focus on the rental income generated by the property. As long as the expected rental income is sufficient to cover the mortgage payments, you may be eligible for an interest-only mortgage, even if your personal income is not substantial.

Tax efficiency

Another advantage of interest-only buy-to-let mortgages is the potential tax benefits they offer. In the UK, mortgage interest payments are tax-deductible for buy-to-let properties if held in a limited company. By maximizing your mortgage interest payments through an interest-only mortgage, you may be able to reduce your taxable rental income and increase your overall tax efficiency. However, it’s essential to consult with a qualified tax advisor to understand the specific implications for your individual circumstances.

Alison Gibson

Ascot Mortgage Expert

Remortgage

Remortgaging is applied when you keep

living in your present property while applying for another mortgage deal with a new lender. Before finding out how to remortgage and get the best offers from experts like Ascot Mortgages, you have to check meeting what parameters of the deal that can help you succeed the most. The range of background factors varies a lot — from the recently changed loan-to-value ratio or your existing agreement coming to an end.

Whether you are trying to get a more beneficial deal or searching for funding to improve your home conditions, remortgaging is one of the most advantageous scenarios to consider.

Are there any disadvantages?

While interest-only buy-to-let mortgages have their benefits, they also come with some considerations:

You're not paying towards owning the property

With an interest-only mortgage, you’re not making regular payments towards reducing the principal amount. This means that you won’t be building equity in the property through mortgage repayments. It’s important to have a clear plan for repaying the principal amount at the end of the term to ensure you don’t encounter financial difficulties when the mortgage is due.

Likely to pay more interest

Since the principal amount remains the same throughout the mortgage term, you’ll likely pay more interest over the long term compared to a repayment mortgage. This is because the interest is calculated based on the entire principal balance. However, it’s worth noting that interest rates for interest-only mortgages can sometimes be lower than those for repayment mortgages, depending on the lender and prevailing market conditions.

Having a repayment plan

Lenders will require you to have a viable repayment plan in place for an interest-only mortgage. This could be through the sale of the property, investments, or other assets. It’s crucial to carefully consider your strategy for repaying the loan at the end of the term to avoid any potential financial difficulties or forced property sales.

Am I eligible for an interest-only buy-to-let mortgage?

To be eligible for an interest-only buy-to-let mortgage, lenders typically consider the following factors:

– The potential rental income of the property: Lenders assess whether the expected rental income is sufficient to cover the mortgage payments. They may require a minimum rental coverage ratio, often around 125% to 145% of the mortgage payment based on a stressed interest rate.

– Your credit history: Lenders will review your credit score and credit history to determine your creditworthiness.

– Your property investment experience: Lenders may consider your experience as a landlord and your track record with managing buy-to-let properties.

– Affordability assessment: Although there are no minimum income requirements, lenders will assess your ability to afford the mortgage based on your overall financial situation.

How much can I borrow?

The amount you can borrow for an interest-only buy-to-let mortgage depends on several factors, including the rental income potential, your creditworthiness, and the specific lending criteria of the lender. Typically, lenders may lend up to 75% of the property’s value for interest-only buy-to-let mortgages.

How much deposit will I need?

The deposit requirement for an btl interest only mortgage varies based on criteria like creditworthiness and rental income potential. Lenders typically require a minimum deposit of 25% to 40% of the property’s value. The exact deposit amount will depend on various factors, such as the lender’s criteria, your creditworthiness, and the property’s rental income potential.

At Ascot Mortgages, we understand the intricacies of interest-only buy-to-let mortgages in the UK. Our experienced team is committed to finding the best mortgage option tailored to your specific needs. Contact us today, and let us guide you through the process of securing the ideal buy-to-let mortgage deal for your property investment goals.

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FAQ

Yes, it is possible to switch from a repayment to an interest-only mortgage on a buy-to-let property, provided that you meet the lender’s eligibility criteria. This might include certain income requirements, a sufficient amount of equity in the property, and demonstrating that you have a viable strategy to repay the capital at the end of the mortgage term. It’s always recommended to consult with a mortgage advisor to ensure you understand the implications and benefits of this move.

While it’s possible for a first-time buyer to get a buy-to-let mortgage, the availability of interest-only mortgages for first-time buyers is more restricted due to the increased risk perceived by lenders. Some lenders may refuse outright, while others may have stricter lending criteria. It’s also important to note that obtaining a buy-to-let mortgage as a first-time buyer may be more challenging because of the lack of a residential homeownership history. Each lender has their own criteria, so it’s essential to seek professional advice to understand your options.

At the end of an interest-only buy-to-let mortgage term, the original capital amount borrowed remains to be paid in full, as throughout the term you’ve only been paying the interest. It is the borrower’s responsibility to have a plan in place to repay this sum. This could involve selling the property (assuming that the property value has not declined), refinancing, or using other savings or investments. It’s crucial to plan ahead for this to avoid any financial pitfalls.

Yes, a buy-to-let interest-only mortgage can be an effective tool for portfolio refinancing. It can free up cash flow due to lower monthly payments (as you’re only paying interest) and the money saved can be used for other investments or to expand your property portfolio. However, keep in mind the risks associated with interest-only mortgages and that you’ll need a clear strategy to repay the capital at the end of the term. Always consult with a professional to make the best decision based on your individual circumstances.

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