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
£ 0
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 145 reviews from review us onElliot E. ★★★★★ Phil Greenwood was fantastic in assisting us in getting our BTL mortgage when several other mortgage brokers were not able to, given our particular circumstances and self employed status. From starting with an initial call right through to the finish, communication was excellent and we're absolutely thrilled. Thank you, Ascot Mortgages for such a professional service.vanessa G. ★★★★★ We had great experience with Natalia. She provided prompt and excellent service throughout our house purchase process.We highly recommend Natalia for mortgage adviseFlora 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.Debbie P. ★★★★★ Cannot speak highly enough of Ascot Mortgages who have helped me on my journey over the last seven years. They have made the dream property possible twice. Thank you to Alison, Jardelle and all the team. I am very grateful.Areti D. ★★★★★ Absolutely thrilled with the exceptional service provided by Ascot Mortgages Ltd and especially by Natalia Barry! Even though our home purchase hasn't been completed yet, we couldn't wait to share our positive experience. From the moment we reached out, their professionalism and expertise shone through, making the daunting process of securing a mortgage a breeze.Not only did Natalia navigate the intricacies of the mortgage market with finesse, but they went above and beyond by suggesting other high-quality services, including solicitors and insurance providers. This comprehensive approach is making the entire home-buying journey seamless and stress-free.Natalia took the time to understand our unique needs and financial situation, ensuring that the options presented were tailored perfectly.Communication is prompt and clear throughout, leaving us feeling informed and confident at every stage. Natalia had our best interests at heart, going the extra mile to secure a fantastic mortgage deal.We cannot recommend Ascot Mortgages and Natalia highly enough. If you're in need of mortgage assistance, look no further. With their expertise and dedication to client satisfaction, you're in the best hands possible. A huge thank you to Natalia for making our home-buying experience a dream come true!Ashley Cox 1. ★★★★★ Would 100% recommend. Myself and my partner are currently going through the mortgage process as first time buyers. Natalia Barry has dealt with our application from day one. She has always been on hand to help, informative throughout and reliable when we have had questions. She has given us several options and broken them down into simple terms to help us. Natalia has truly been exceptional who deserves every bit of credit. We certainly got lucky having her as our first mortgage consultant.Dominik S. ★★★★★ Alison and the Ascot Team are excellent. I have used them for 5 years now and they deliver the most competitive mortgage deals fast. Just what I need. Thank you!Eric T. ★★★★★ We have dealt with Ascot Mortgages twice. Once for a mortgage about eleven years ago and recently for life insurance.In both cases we were treated with the utmost respect and professionalism.In the case of the life insurance application, we considered ourselves to be problem customers because of our age and numerous health issues.Richard Johnson, who managed this application couldn't have been more helpful.He worked in our best interest and was dedicated to providing an excellent service.We were kept up to date through all of the stages of the application and when our doctors were very slow in producing medical reports for the insurance company he persisted where others might have given up.The service we had from Richard was pleasant and professional throughout some difficult stages.My wife and I have no hesitation in recommending Ascot Mortgages.Zack R. ★★★★★ Having dealt with Ascot Mortgages and Alison for many years now I can say that you wont find a more professional, knowledgeable and efficient company to help with your mortgage. Alison is patient and makes the whole process seem easy. She has the answer to any question you have and seems to genuinely care. I can not recommend enough. I am sure I will be using Ascot Mortgages for years to come.Umair Z. ★★★★★ It has been a fantastic experience to work with both Phil and Jardelle at Ascot Mortgages to secure a mortgage product for my first home. Phil made the mortgage process smooth and easy. They are professionals and know what they are doing. Very pleased with the service and communication. would highly recommend them.Hello at NLP West M. ★★★★★ I needed a buy to let re-mortgage. Ascot were efficient from start to finish. I can recommend them completely especially because they can search the whole spectrum of mortgage lenders and meet the clients needs. never waiting for staff to get back and always kept me in the loop.Onohomen O. ★★★★★ ZHOU J. ★★★★★ It has been a brilliant experience to work with both Phil and Jardelle at Ascot Mortgages to secure a great mortgage product for our next home. Given how challenging the current market is, they have done a fantastic job to meet our needs with their expertise, professionalism and effectiveness. We would highly recommend their services to whom seeks help with their property purchase.Nicholas S. ★★★★★ Fantastic service. Ellie and Jardelle were always quick to reply to any queries and very helpful throughout the process. Highly recommend!Stacey S. ★★★★★ Jason was brilliant to work with! Always on top of the transaction! Would highly recommend 👍Scott ★★★★★ Although I've not bought anything yet, they (Jason in particular) have been super helpful in my search for the right mortgage deal, whilst also giving an honest opinion during these difficult times. Would highly recommend.Sandra I. ★★★★★ Fantastic from start to finish! Natalia and Jason found me the best rate for my remortgage and they were extremely efficient! Best service I’ve ever received from a brokerage company. Thanks so much.Virmantas N. ★★★★★ Amazing service and great communication. Ellie Morgan had quickly completed all requests and over delivered all expectations.Highly recommended for those who want to get the stuff done without any delays!David W. ★★★★★ I have used ascot for 3 renewals since they done helped me with my purchase which was complicated and will continue to use them going forward. Very fair prices and very helpful and knowledgeable even with just general information.Adam B. ★★★★★ Natalia made life very easy for us when remortgaging. Third time using ascot always a breezeTaff G. ★★★★★ Ascot Mortgages have been brilliant. Easy to work with and incredibly helpful. I am always happy to recommend them. Natalia and Jason have made the whole process much easier than I was expecting. Excellent service.Daryl L. ★★★★★ We've had a fantastic experience with Natalia Barry and Jason Jones at Ascot Mortgages for our property purchases and refinancing. Their expertise, coupled with genuine care and understanding of our needs, made the process smooth and stress-free.They were consistently communicative, keeping us informed at every step. Their assistance in consolidating our protection cover was invaluable, simplifying what could have been a complex process.What set them apart was their personal touch – always polite and ready to pick up the phone for a chat. This level of personal engagement is rare and much appreciated.In short, Natalia and Jason are not just skilled professionals but also truly dedicated to their clients. We highly recommend their services to anyone in need of mortgage advice.Sarah A. ★★★★★ I have used this firm for several years and they have always been super helpful and supportive, attentive and resolved issues in really useful ways. Shout out to Alison, Ellie and Jardelle (and the team!)Georgia W. ★★★★★ We worked with Ellie to secure our mortgage and protection, and she was a dream! Being a first time buyer, I was quite clueless about the process, and in a time where mortgage rates have been quite high, she worked right til the end to make sure we were getting our mortgage at the best possible rate and was always available to answer all questions I had. Can't recommend enough 🙂Richard D. ★★★★★ js_loader

Written by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

07.02.2024

Written by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

07.02.2024

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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