Jason Bailey

Expertly compared by Jason Bailey

Products Updated May 13, 2018

Interest Only Buy to Let Mortgages

Our mortgage experts can compare and view all the interest only buy to let deals available side-by-side from the whole mortgage market place.

Free Buy to let mortgage advice and brokerage. Our experts can find you the best deals and have access to exclusive rates:

1 providers expertly compared:

Lending Expert

Why?

This provider is our Expert’s Choice in its category as it won tops marks for the following.

  • TRUST
  • VALUE
  • EXPERTISE & KNOWLEDGE
  • CUSTOMER SERVICE

Learn more about how we review and assess the providers here on Lending Expert.

LTV
50% - 85%

Initial Rate
1.44% - 5.29%

Standard Rate (SVR)
4.99%

APRC
4.7% - 5.2%

Type
Variable & 3 ,5 & 10 Fixed Rate

Rated 4.8/ 5

All credit types

The buy to let mortgage experts at First Choice Finance can quickly assess your requirements and search the market place to find you the perfect mortgage deal. Click get a quote to make an enquiry today.

Read our customer and visitor reviews for this product:

Rating: 4 / 5 with 1 votes

Limited market products from the BTL sector

by Henderson

There agents were quick to call me back and were very friendly and helpful. BTL products were limited however.

Why most buy to let mortgages are interest only

Buy to let mortgage on interest only

Buy to let mortgage on interest only

Buy to Let mortgages, unlike residential mortgages, are mostly interest only mortgages. This is because buying a property to let it out means that you will be generating an income from the purchase itself, which then generates the income to pay the interest on the mortgage each month, along with providing you with a return that you can then use to build up a lump sum to help to pay off the mortgage at the end of the term. As many buy to let mortgages do not run to their full term due to the property being sold, the money raised from the sale is then used to make the lump sum payment.

Why you can’t be complacent

Even though you will have an income coming in from renting out your property you will still have to make sure that you keep track of your finances as it is always a possibility that the value of your property will decrease, which could then leave you with a shortfall in the money provided when you come to sell the property. Therefore in order to ensure that you don’t end up with a large bill to pay you should generally set your rent to be significantly more than 125% of your mortgage payments and then use the capital that is generated in order to have a payment plan that will give you a cash lump sum should you need it in order to pay off any remaining mortgage when you come to sell the property.

Another reason why most buy to let mortgages are interest only is because of the low loan to value ratio that many mortgage deals demand. In many cases up to a 40% deposit is required in order to secure a buy to let mortgage. The fact that you can generate this size of deposit means that you present a lower risk than someone who can only generate a 5% deposit. Many buy to let lenders will accept a 25% deposit, though there are a handful that will provide you with a buy to let mortgage for as little as 15% deposit. However the smaller the deposit you have, the higher the interest rate you can expect to pay, and you will also find that these mortgages have a percentage of loan application fee, which can be some of the most expensive application fees especially for larger loans.

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