Just as with a residential mortgage, you can opt for either a repayment or an interest only mortgage for a buy-to-let property.
A repayment mortgage will:
An interest only mortgage:
Many buy-to-let mortgages are interest only as the buyer plans to sell the property at the end of the term in order to repay the money borrowed (along with any taxes) before retaining any equity. This approach means the investor can keep more of the monthly income from the property. However, a repayment mortgage means that the investor will own the property outright at the end of the term. Which one to opt for will depend on the individual investors’ circumstances.
*The information provided should not be taken as financial advice in relation to the UK property market or property investment advice.