When it comes to BTL Mortgages you have 2 repayment methods; Repayment and Interest only. Let’s take a look at both, compare the differences and see which one is preferable.

Interest-only

So, let’s say you borrow £100,000 over a 25-year term at a rate of 3.5%. in this instance, you would pay £291.66 per month as a mortgage payment. After the 25 year term, however, the original £100,000 balance has not changed as your monthly mortgage payments have been interest only.

This means that lenders will require a credible repayment vehicle in place. For BTL Investment property “sale of the property” will be a sufficient method (but yes, you can remortgage before the end of the term).

 Repayment

Again, you are taking a mortgage over a specified term. However, now you are paying the amount borrowed plus interest to the lender. This means that on a £100,000 repayment over a 25 year at a rate of 3.5% your monthly payment would be £501 per month. After the 25-year term, you would have no outstanding balance and you would have repaid the original £100,000.