Interest Only - are they really ideal for B2L

[K2012]

What do you think?

Any experience?

 

[businessfunding]

I think you will struggle to get interest only mortgages in this climate

At a practical level it depends what you plan is for BTL - immediate returns or long term capital growth?

 

[drdes]

theoretically yes since interest can be offset against income to lower your tax bill.

Everything else being equal (such as interest rates etc..), with a capital repayment, your interest payments drop over course of time and so this offset reduces (and hence your taxable profit go up which is not good).

there are of course many other areas to look at such as interest rate on an interest only mortgage vs a capital repayment mortgage, your risk tolerance (since with interest only your balance never drops so you aren't building up a capital cushion), what you will do with the money you save on a monthly basis going interest only vs capital repayment.

professional advice recommended!

 

[PDRD]

Have IO mortgages not been stopped now? I thought they were stopped at the begining of last year? I may be wrong.

Sent from my GT-I9305 using UK Business Forums

 

[tony84]

Interest only below 50% loan to value (LTV) on residential properties are still available, subject to having something in place - an endowment, investments, savings etc on residential properties.
Theyre pretty freely available on BTL properties upto 75% LTV.

 

[Matt1959]

BTL mortgages are unregulated and are regarded effectivly as commercial loans as I understand it. It appears the vast majority of BTL is interest only...