[Finance] Buy to Let Mortgages

[Renegade1]

I can understand why you’d want a repayment mortgage on your own property but why on a BTL investment? Interest only is much cheaper, and you’re more like to break even/make a small profit every month. Of course then you’d hopefully get your deposit back plus equity when you sell?

Repayment mortgage on a BTL seems more hassle than it’s worth? Genuine question!


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Did you read my post properly?

As I said,I believe it's better to take out an INTEREST ONLY mortgage because it gives you flexibility as I have already mentioned.
Yes you can just pay the interest and use the rest of the rent to party or you can use the mortgage like a bank account.Pay
more money in then you need to then when you sell you will get it back.

 

[mikeyjh]

Did you read my post properly?

As I said,I believe it's better to take out an INTEREST ONLY mortgage because it gives you flexibility as I have already mentioned.
Yes you can just pay the interest and use the rest of the rent to party or you can use the mortgage like a bank account.Pay
more money in then you need to then when you sell you will get it back.

Which page of 'Personal Finance for Dummies' is this particular gem from?

 

[Renegade1]

Which page of 'Personal Finance for Dummies' is this particular gem from?

What an idiotic post from a moron.I was explaining as to why I believe interest only is better.
If everyone was to take your approach and criticise statements which are obvious then this forum
would have twice as many posts.

Grow up.

 

[LlcoolJ]

What an idiotic post from a moron.I was explaining as to why I believe interest only is better.
If everyone was to take your approach and criticise statements which are obvious then this forum
would have twice as many posts.

Grow up.

...

 

[Herr Tubthumper]

Excellent work.

 

[Renegade1]

...

Must have taken ages to find that.I'm honoured you bothered.

Whatever happened to those two I use to like them?
Got anymore?

 

[Biscuit]

Did you read my post properly?

As I said,I believe it's better to take out an INTEREST ONLY mortgage because it gives you flexibility as I have already mentioned.
Yes you can just pay the interest and use the rest of the rent to party or you can use the mortgage like a bank account.Pay
more money in then you need to then when you sell you will get it back.

Alright mate don’t get your knickers in a twist. As it happens I’ve gone interest only on my BTL too, because of the flexibility but wondered why others might prefer repayment. No need to be so passive aggressive about it


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[Renegade1]

Alright mate don’t get your knickers in a twist. As it happens I’ve gone interest only on my BTL too, because of the flexibility but wondered why others might prefer repayment. No need to be so passive aggressive about it


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Look mate.Enough with your aggressive passive aggressive posts sent in an aggressive way with some passive intent.
I said nothing about taking out repayment mortgages so couldn't understand why your post assumed I had that's all.

Yes makes no sense to take out a repayment and therefore you're stuffed if the property is empty for a while etc.
I understand that some landlords just take the profit and don't pay more than the interest that is due.
However obviously before the mortgage comes to an end you will have to sell up.

It seems strange in a way that you can take out a BTL interest only mortage without stating how you intend
to deal with the property/mortgage when the term is up.

Perhaps lenders just assume the landlord will sell up before it ends.

 

[Biscuit]

Look mate.Enough with your aggressive passive aggressive posts sent in an aggressive way with some passive intent.

Late to the party, [MENTION=36494]Renegade1[/MENTION]’s a nutcase isn’t he?

Oh well, another name for the list!


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[Herr Tubthumper]

Look mate.Enough with your aggressive passive aggressive posts

Aggressive passive aggressive.....I’m loving this thread.

 

[Triggaaar]

If you're not in it for a monthly profit but instead want a long term investment then repayment is obviously far better as you're building up equity in the property every month.

As I said,I believe it's better to take out an INTEREST ONLY mortgage because it gives you flexibility as I have already mentioned.
Yes you can just pay the interest and use the rest of the rent to party or you can use the mortgage like a bank account.Pay
more money in then you need to then when you sell you will get it back.

As long as you can count the interest element against income for tax purposes, you're better off having interest only. It's not swings and roundabouts, it's just better.

If you have enough money to pay the same as a repayment mortgage would cost, that's great, you can put the difference into an ISA, or invest it in another way.

 

[Triggaaar]

[MENTION=3887]Uncle Spielberg[/MENTION] - when people take out a BTL interest only, and they keep the property, obviously at the end of the mortgage term they are supposed to repay the mortgage. What happens if they don't (they don't have the money)?

Do they have a set period of time in which they are allowed to sell the property, before it's repossessed and stuck in an auction?
Assuming the property owner has always paid the interest on time, do they have any right to extend the mortgage term?
What interest rate do they pay from the day the mortgage ends until the day the debt is settled?

Thanks

 

[Uncle Spielberg]

[MENTION=3887]Uncle Spielberg[/MENTION] - when people take out a BTL interest only, and they keep the property, obviously at the end of the mortgage term they are supposed to repay the mortgage. What happens if they don't (they don't have the money)?

Do they have a set period of time in which they are allowed to sell the property, before it's repossessed and stuck in an auction?
Assuming the property owner has always paid the interest on time, do they have any right to extend the mortgage term?
What interest rate do they pay from the day the mortgage ends until the day the debt is settled?

Thanks

They will have out down 25% at the start so unless the market falls by over 25% during the term there is no issue, if not some buy to let lenders lend to age 90 they can use

 

[Triggaaar]

They will have out down 25% at the start so unless the market falls by over 25% during the term there is no issue

I know there should be enough equity in properties that have both started with a decent deposit and gone through decades of price rises - I'm asking about the mechanics of when the property owner leaves it to the last minute, and then the mortgage is due to be repaid. How much time do they have, what interest do they pay in the meantime etc?

 

[Herr Tubthumper]

As long as you can count the interest element against income for tax purposes, you're better off having interest only. It's not swings and roundabouts, it's just better.

If you have enough money to pay the same as a repayment mortgage would cost, that's great, you can put the difference into an ISA, or invest it in another way.

If you have the cash to pay down the mortgage monthly, why is it better to put it in an ISA? I would have thought paying down the mortgage, and in turn slowly reducing your interest payments, would be better? Are you assuming the ISA interest is greater than the mortgage interest payment reductions?

 

[LlcoolJ]

If you have the cash to pay down the mortgage monthly, why is it better to put it in an ISA? I would have thought paying down the mortgage, and in turn slowly reducing your interest payments, would be better?

Plus you don't end up with the scenario Trig is asking about. You end up owning the property.

 

[Herr Tubthumper]

Plus you don't end up with the scenario Trig is asking about. You end up owning the property.

Quite. I’m struggling to see why it’s beneficial.

 

[Springal]

Quite. I’m struggling to see why it’s beneficial.

Me too. Unless the interest rate on savings or an ISA is more than the mortgage, surely you're better off paying down the mortgage?

 

[Renegade1]

As long as you can count the interest element against income for tax purposes, you're better off having interest only. It's not swings and roundabouts, it's just better.

If you have enough money to pay the same as a repayment mortgage would cost, that's great, you can put the difference into an ISA, or invest it in another way.

So as an ISA should have a higher interest rate than a mortage it's better rather than to overpay an interest only mortgage,put that overpayment into an ISA?
What are ISA rates?


I would be interested to know for every 100m invested in this country what this money is invested into and what percentage.Am I right to assume the No 1 investment would be property?

 

[Triggaaar]

If you have the cash to pay down the mortgage monthly, why is it better to put it in an ISA?

It's all about tax. When you earn revenue from rent, you pay tax on that revenue, but only after you have deducted the interest on the loan you used to purchase the property. If you pay down the mortgage, then the amount of interest you're paying on the property goes down, so you pay more tax.

Of course paying less interest is good, but that's balanced by your alternative use of the cash earning interest. If you're investing in BTLs, then you should be doing well with your investments - better than using the cash to pay off a mortgage and increase your tax.

An alternative to ISAs etc would be to repay the mortgage on your home instead. You're not getting tax relief on that anyway, so repaying that is good.

I guess the exception would be if you've got a rubbish BTL mortgage and your rate is much higher than you can earn with investments.